Last week saw a number of strong reversal signals, with major levels being broken. However, this week looks set to start with initial retracements of those moves prior to the next more. 

Source: Bloomberg

EUR/USD strength unlikely to last
EUR/USD sold off heavily late last week, following on from an European Central Bank meeting which hinted at possible further action in March. This brought price back down below the crucial $1.0808 support level to create a more bearish scenario for the pair.

This morning is seeing some strength coming back into play for the pair, yet the likeliness is this will be a temporary retracement. So far this morning, we have seen the 23.6% Fibonacci retracement hold as resistance. Should we break above this level, the region between the 38.2% pullback $(1.0853) and the low from last Tuesday ($1.0859) seems a likely source of strong resistance to continue the downtrend.

As such, further upside would be expected with a close back above $1.0825, yet this is not expected to last. 

GBP/USD strength likely to return
Last week saw GBP/USD form a weekly doji with a long lower shadow, which given the recent selloff is a big sign the recent weakness could be about to reverse. Similarly, the short-term charts have seen price break back above the Tuesday high of $1.434 which provides us with another bullish indicator.

The key here is whether the current pullback creates a new higher low for a push through $1.4363 (Friday’s peak). That would be a very powerful bullish signal. However, for now, we are likely to see the pair drift lower to find another base and rally once more.

Support levels of note are $1.4230 and $1.4080, with resistance levels of $1.4340, $1.4363 and $1.4476.

USD/JPY turning lower for now
USD/JPY saw a rally from the crucial ¥116.21 support level last week, with the second half of the week bringing a more bullish view given the break through ¥118.06 and ¥118.38 resistance. We are seeing this pair selloff heavily this morning, which looks like a temporary move to take back some of the gains last week.

Given the major reaction at ¥116.21, alongside a break above ¥118.38, it seems likely we will see a move higher before long. Yet for now, a closed hourly candle below ¥118.38 would provide a bearish short-term view to find a new higher base before we push back through ¥118.86 once more.

Support levels of note are at ¥118.06, ¥117.29 and ¥116.97. Resistance levels to note are ¥118.86, ¥119.70 and ¥120.00. 

AUD/USD downside likely after failure swing
AUD/USD is on the verge of seeing yet another rally undone with the pair on the cusp of breaking a crucial support level. Thursday’s ascending wedge formation provided us with a bearish hint, which has subsequently been followed by a double top with a failure swing and break through neckline support.

As such, I expect to see selling ramped up heavily with a strong move to the downside in the early part of the week. Support levels of note are at $0.6960, $0.6938 and $0.6875. This view would be invalidated with a closed hourly candle back above $0.7032.

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