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

EUR/USD and GBP/USD turned lower following uptrends, yet will the moves extend or will the recent trend kick in once more? On the flipside, USD/CAD breaks to a new intraday high for the first time in a month.

EUR/USD forex pair
Source: Bloomberg

Will yesterday’s EUR/USD selloff extend before ECB?
This morning is seeing selling take hold in EUR/USD despite an early rally. The pair has been trending downwards ever since hitting the crucial $1.1059 resistance level yesterday. That level has been a key source of resistance over recent months, most notably marking a top in December.

As such, there is a good chance we could see the pair sell off heavily from here as we head into tomorrow’s European Central Bank (ECB) meeting. For now, another intraday leg lower seems likely, with a closed hourly candle below $1.0940 needed to indicate the market is set to extend the selling towards $1.0903 and $1.0881 support levels.

Alternately, an hourly closed candle above $1.1011 would negate the bearish view, with $1.1059 the next key resistance.

GBP/USD within complex retracement
GBP/USD has extended its retracement over the past two days, with the pair seemingly creating a lower high rather than simply breaking back towards Mondays high of $1.4284. This is certainly a bit of a worry the trend could be over. However, we would need to see an hourly close below $1.4134 to negate the bullish view.

As such, another move towards $1.4284 remains the base case, with $1.4141 (76.4% retracement) the key support level which could spark another leg higher. It is worth bearing in mind the long-term trend is downwards and thus we are likely to return to that trend soon enough. Yet until we see a bearish signal, it is worth remaining with the trend.

USD/JPY consolidates above crucial support level
USD/JPY has been gradually moving lower over the past two days. However, set within the uptrend of late February, the key to understanding whether the bears are back in control would be a closed hourly candle below ¥112.16.

For now, price is stuck in a consolidation phase with a clearly defined range of ¥112.41-112.76. As such, selling would likely follow any return to the top of this range. Alternately, a break below ¥112.41 would look towards ¥112.16 support as the next and most crucial challenge for the pair.  

USD/CAD retracing after yesterday’s rally
USD/CAD managed to break out of its recent downtrend yesterday, with price pushing through the crucial C$1.3371 level. There is a possibility this is simply a more extended bounce before another leg lower.

However, this is the first time in a month the pair has created an intraday higher high. Thus another move higher would not be surprising and as long as price remains above C$1.3371, another move back above yesterday’s high of C$1.3450 seems likely.  

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.