FX levels to watch – EUR/USD, GBP/USD, USD/JPY, USD/CAD

Brexit risk sends sterling lower, while EUR/USD downside comes under question with a crucial support level in view.

Source: Bloomberg

Potential for EUR/USD bullish reversal

Last week saw EUR/USD drift lower, in what looks like a retracement of the early February rally. Friday’s fleeting rally is being sold into now, yet with the crucial $1.1059 resistance (December high) within close proximity, there is a chance we could see the pair start to reverse higher in the near future.

The inability to break through $1.1059 would be key to this and we would need to see a closed hourly candle back above $1.1139 to give some confidence that a bullish turnaround could be in the offing.

As such we are in a wait and see mode, where a closed hourly candle below $1.1059 would point towards a bearish continuation of the move seen this week gone.

Otherwise a move back above $1.1139 would sow the seeds of a bullish resurgence.

Resistance levels of note are $1.1139, $1.1160, $1.1193 and $1.1252. Support levels are $1.1059 and $1.0967.

Brexit risk leads GBP/USD lower

The choppy conditions for GBP/USD continue apace, with the pair rallying heavily into the close on Friday, only to gap lower after Boris Johnson declared his desire to back the ‘out’ campaign in the EU referendum.

It is clear that this pair created some form of topping pattern and is now looking to return to the downtrend that dominated the start of 2016.

Given the long lower shadow on the prior hourly candle, there is a chance we could see a move back up to the $1.4235 resistance level to precede another move lower.

Ultimately, further downside seems likely, yet given the choppy and unpredictable nature of this pair, the pathway is unlikely to be straightforward.

Resistance levels of note are $1.4235, $1.4308 and $1.4351, with support at $1.4149, $1.4125 and $1.4080. 

USD/JPY downtrend continues

USD/JPY is once more moving gradually higher this morning, in the same manner as Friday’s initial moves. However, we remain clearly within a downtrend over the past week and thus another move lower seems the most likely event.

As such, another leg lower is expected unless we see a closed hourly candle back above ¥113.20.

Support levels of note are ¥112.30, ¥111.66 and ¥110.99. Resistance levels to watch are ¥113.20, ¥113.37 and ¥114.39.

USD/CAD breaks lower

USD/CAD saw a nice uptick following the flag breakout on Friday. However, this has been sold into heavily, with price now moving back below the Friday low of C$1.3743.

This provides a more bearish view and largely reflects the potential for further gains in oil. There is a chance for a bounce from the C$1.3716-C$1.3706 support zone, yet as long as any bounce does not break back through C$1.3816, it looks likely that we will see further losses.

Resistance levels of note are C$1.3743, C$1.3783 and C$1.3850. Support levels to watch are C$1.3716, C$1.3706 and C$1.3653.

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