EUR/USD strength likely to dominate week
The EUR/USD is in a similar position to the Dollar Index, except signs are pointing towards a renewed strength coming through over the coming days.
This morning we are seeing a possible evening star reversal come into play from the historically notable $1.129 resistance level. Any move lower in the near term would be deemed as exactly that, short term. As long as the price remains above $1.121 I am confident of further upside.
Support levels to watch include $1.1263, $1.1246 and $1.1242. Should we see the break higher I am looking for, the next possible resistance levels to watch are at $1.1311, $1.1364 and $1.1438.
AUD/USD triangle forms beneath resistance
AUD/USD saw a break below $0.7215 last week, bringing with it the expectations of even further misery to be poured onto the currency which has seen 35% of its value lost over the past four years. That selloff doesn’t seem to be over yet, with the price forming a symmetrical triangle. A triangle often does not have a particular directional bias, yet given the trend coming into this formation, it certainly looks like a continuation pattern to me.
Given the stepped nature of trading coming into today, it is often useful to watch the previous low to create a new resistance level, and thus $0.7215 is crucial here. In either case, a break below $0.708 would point towards a move to $0.7046 and possibly lower. Conversely, a break above $0.7215 would point towards some form of resurgence back towards $0.74. However, I favour further losses, and the upper end of this triangle is seen as an area where sellers will likely seek to enter the fray.
USD/JPY turns lower again for a renewed bearish outlook
USD/JPY is moving lower, following a failed attempt to break higher yesterday. The move below the ¥120.88 points towards the completion of the topping formation, and I believe we are now set for a substantial move lower in this pair. The ¥120.0 mark appears to be the next likely support level to hit, yet overall I believe we are set for a strong move lower in the coming days. A move back above the ¥120.145 mark would be needed to negate my bearish view.