FX snapshot: Dollar Index, USD/JPY, USD/CAD, GBP/AUD

The dollar is in freefall, yet USD/CAD and GBP/AUD pullbacks provide great pivot points to watch for the next move higher.

Source: Bloomberg

Dollar weakness expected to continue
The Dollar Index is in freefall, driven primarily by Japanese yen and euro strength. However, this downward action is likely to continue today, given price has moved below the 94.74 and 94.90 support levels.

I therefore see those levels as new resistance and there is reason to believe we could even see a move down to 93.40 which represents the next major support level.  

USD/JPY breaking below key support
USD/JPY is attempting to break below the July low of Y120.42 which could be a key level to watch out for today. The massive losses seen in this pair points towards the safe haven status of the yen, which given the crisis on global markets, is likely to resume.

I am looking for intraday charts to show new resistance at Y120.42, which if it occurs, would bring a good pivot point for further losses. Y120.00 would then be our first level of support to watch out for past Y120.43.

USD/CAD breakout affords us a pullback before bulls take hold
USD/CAD finally managed to break through a whole raft of resistance levels between C$1.3156 and C$1.3214 to bring about a bullish signal. However, we have since pulled back to the C$1.3214 level, which has provided new found support.

I therefore expect price to be underpinned by that C$1.3214 support level and a move towards C$1.33 seems likely in the near future. Bear in mind that the dollar has been declining significantly, particularly against the yen and euro, which therefore leads me to believe that this trade is driven by Oil price weakness and its impact on the Canadian dollar. Thus be on the lookout for crude price too.

GBP/AUD breakout pullback could produce major bounce higher
GBP/AUD has managed to break higher from AUD2.1528 overnight, yet a temporary pullback has provided an opportunity for the bulls to get in at a better price. That previous key resistance level now represents new support which brings about a likely reversal point.

Thus I am bullish unless price moves below AUD2.131, yet am expecting a bounce from around AUD2.1528 beforehand. Given that we have already started showing signs of bullish strength coming back into play from very near to AUD2.1528, I expect to see it push higher from here, with a move towards AUD2.18 and AUD2.19 likely.

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