FX snapshot – EUR/USD, GBP/USD, USD/JPY, AUD/USD

Dollar strength is expected to continue, with the AUD/USD in particular looking likely to fall. 

Pound sterling
Source: Bloomberg

EUR/USD attempts to regain ground
EUR/USD has rallied overnight, bouncing higher from the crucial $1.0796-$1.0808 support zone. The ability to remain above $1.0796 is going to be crucial for this pair, for a loss of that level would likely give way to significant losses.

In the short-term, the pair is selling off once more, where the $1.0828 support level will be key. A closed hourly candle below $1.0828 could bring a swift move back towards the $1.0796 area.

The ability to remain above $1.0828 would bring expectations of another move higher, with resistance at $1.0870 and $1.0897. Conversely, a move below $1.0828 would look towards $1.0808 and $1.0796 as the next support.

Further selling expected for GBP/USD
GBP/USD has been gradually moving higher overnight, in a countertrend retracement. Given the downtrend in play, further downside is expected and with resistance being found upon the $1.4951 January low, alongside the wedge bottom.

As such, we would need to see a close back into the wedge and above $1.5009 to provide a more bullish outlook. Until then, the bearish view remains in play, with the signal of another leg lower being provided by a closed hourly candle below $1.4885. Support levels of note are $1.4885, $1.4865 and $1.4831.

USD/JPY rally short lived
The USD/JPY recovery seen this week has seemingly hit the buffers after the Bank of Japan left its monetary stimulus target unchanged overnight. This weakening of USD/JPY has brought price back below the key ¥122.30 support level, following a brief move back to the top of the November range.

The move below ¥122.30 is a bearish one, yet until we see a sell through ¥121.38, there is still an uptrend in play. A closed candle below ¥121.38 would point towards a return to the selling pressure of last week.

Conversely, watch out for bullish intraday reversal signals should selling stall ahead of ¥121.38 support. Key support levels of note are ¥121.38, ¥121.07 and ¥120.41. Resistance levels of note are at ¥122.02, ¥122.30, ¥123.00 and ¥123.60.

AUD/USD rally to be short lived
Yesterday saw AUD/USD sell off through key $0.7159 support for the first time in December. The pair is seeing a subsequent bounce overnight, with price pushing back towards that crucial $0.7159 level.

Given yesterday’s bearish selloff and the importance of this $0.7159-$0.7170 zone, another leg lower seems highly likely. Thus a bearish view holds, with the $0.7159-$0.7170 resistance zone representing the likeliest area for it to occur.

Price would need to move back above $0.7215 for a bullish outlook to come back into play. Support levels of note are at $0.7097, $0.7069, $0.7044 and $0.7016. Resistance levels are at $0.7159, $0.7170 and $0.7215.

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