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

FX markets hesitate ahead of key event risk today, with the UK budget and FOMC meeting due to be concluded. However, with GBP/USD and USD/CAD attempting to reverse recent trends, will we see those events push them further off-trend?

Euros and dollars
Source: Bloomberg

EUR/USD turning lower in wedge pattern
The pair is trading within a tighter daily range as we approach tonight’s FOMC meeting conclusion, with markets gradually calming down after Thursday’s ECB meeting. With the hourly ATR at its lowest in almost two weeks, there is a clear hesitancy in play ahead of a big risk event.

This morning is seeing the pair rolling over, utilizing the 50-hour simple moving average as resistance. However, with a clearly defined support trendline and yesterday’s low of 1.1072 to contend with, it is likely that this pattern will continue to play out until the meeting.

A falling wedge is typically seen as a bullish pattern and thus another bounce seems likely between 1.1071-1.1059. We await a breakout from this pattern to gain subsequent direction, with 1.1059, 1.1035 and 1.0967 the next key support levels. Resistance levels of note are 1.1125, 1.1139 and 1.1193.

GBP/USD breaks out of uptrend
The pair saw a major sell-off yesterday, and broke out of the ascending channel that has dominated price action throughout March so far. More importantly, price closed below the first swing low of 1.4122. The four-hour chart highlights this break very clearly, yet with the stochastic heavily oversold, there is a possibility of a bounce to retrace some of yesterday’s move.

However, we now seem likely to be on our way to returning into the bearish trend which has dominated the past 20 months. Thus a bearish view is in place unless we see a closed four-hour candle above 1.4436.

Any bounce would be seen as a retracement, and thus is likely to be sold into. Support levels of note are 1.4080, 1.4042 and 1.3836. Resistance levels of note are 1.4122, 1.4254 and 1.4317.

USD/JPY range continues
​The pair continues to trade within the 112.16-114.55 range which has been in play over the past three weeks. Clearly we are seeing the pair move towards the upper-end of this range currently and as such, intraday reversal patterns within the 114.25-114.55 zone will be key.

USD/CAD attempts to break out of downtrend
The pair rallied into 1.3397 resistance yesterday, and it has been consolidating below ever since. This level is crucial as a break through it would negate the continued creation of lower-highs and lows. With price currently turning higher once more, there is a good chance we could see another challenge to 1.3397.

Ultimately, the day’s bias will be decided by the reaction at this level. While price remains below 1.3397, we remain within a clear downtrend, with a bearish view. However, above this level, we would be looking at some form of possible recovery with 1.3446, 1.3457 and 1.3500 the next key resistance levels.

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