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

All eyes are on Janet Yellen and the dollar, as her testimony on Capitol Hill dominates the news.

GBP/EUR currency cross
Source: Bloomberg

GBP/USD driven by dollar weakness
Dollar weakness continues to push this pair higher, as Janet Yellen’s testimony fails to shift views that the Federal Reserve is not going to move in 2016. However, what is lacking at present is a move through to fresh highs for the month above $1.4650.

Buying on weakness may prove to be the best approach here, with upside targets around $1.4650 and then $1.4725. A move lower targets $1.44 and then on down towards the 8 February low at $1.4350.

EUR/USD at risk of a drop
Three days of pushing up against $1.13 have led to little real progress for EUR/USD, so the risks to the downside are increasing. A drop down would head towards $1.1132, and then $1.1070.

Below this opens the way to $1.1057, the 200-day simple moving average (SMA). If dollar weakness pushes the pair upwards then the targets become $1.1340 and on to $1.14. 

USD/CAD appears bullish
The recovery goes on here, although for now gains continue to be capped by the 50-day SMA (C$1.3958). Gentle upward momentum remains the bulls’ best ally, with upside targets around C$1.40 and then $1.4187. The outlook remains bullish unless we see a firm drop below C$1.38. 

USD/JPY looks set to bounce
The trend goes on here, with yesterday’s move to the hourly downtrend line bringing out the buyers. Those who missed this might want to wait for another bounce, given that intraday oscillators are oversold – the potential for a bounce back to around ¥114 is high, especially given how buyers have so far defended the ¥112.50 support level.

With the pair now oversold on a daily chart as well, it pays to wait for the rallies, rather than chasing these moves. Further downside support is possible around ¥111.75, with the possibility of a capitulation move to ¥110.40.

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