There is potential for US dollar strength, as EUR/USD and GBP/USD selloff this morning. However, for USD/JPY and AUD/USD, the greenback seems likely to be the loser.

Canadian dollar coins wrapped around a US dollar note
Source: Bloomberg

EUR/USD upside could be limited

We have been seeing some form of resurgence in the EUR/USD off the back of the FOMC minutes. However, this is countertrend and would therefore be unlikely to last for too long. While we have not seen the price close below $1.0667 quite yet, the sharp move lower from Fibonacci support ($1.0711) is looking increasingly ominous. Should we see a closed hourly candle below $1.0667, then this would point towards a return of the bearish view, with $1.0617 support the next level to watch out for. Until we do see that close below $1.0667, there is a chance of a bounce, which would subsequently look towards $1.0711 and $1.0763 resistance levels.

GBP/USD retracing heavily

GBP/USD is retracing further this morning, in a continuation of the move we have seen yesterday evening. The creation of a new lower high and low is a warning sign, yet the support level of $1.5234 looks more important as a reversal signal than this shorter-term level. Thus a close below $1.5234 would be needed to portray a possible bearish trend coming into play. Until that happens, this looks like simply a retracement of the recent move higher, with $1.5265 and $1.5241 levels representing key support in the near term. Until the price closes below $1.5234, we remain bullish, with key resistance levels at $1.53, $1.533 and $1.5359.

Bullish AUD/USD channel breakout

The AUD/USD pair has seen a clear descending channel breakout towards the upside this week, with the close above $0.7159 a key bullish signal. We have seen this rally retrace moderately overnight, with support provided by the 200-period SMA (four hour). As such, another leg higher seems likely for today, which would subsequently look towards $0.7224 and $0.7271 as the next resistance levels. Conversely, a close below $0.7152 would bring a more bearish view, where $0.7140 and $0.7100 would be the next support levels to watch.

USD/JPY selling off

The USD/JPY has taken a turn for the worst, with the price breaking below the key ¥123.20 support level and subsequently selling off heavily. The retracement higher overnight seems to have found the 200-hour SMA and ¥123.00 resistance zone difficult to overcome, and subsequently we are looking at another possible leg lower today. A close below yesterday’s low of ¥122.62 would signal the start of another move lower, where the next major support level is at ¥122.30. Conversely, a close above ¥123.05 could point towards this ascending channel continuing to make gains in a bid to regain ¥123.20.

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