FX markets appear to be dominated by countertrend retracements and thus a return to the norm is expected to resume as the day progresses.

Source: Bloomberg

EUR/USD trend line support in view
EUR/USD has been retracing lower this morning as a continuation of the trend seen late into Friday. The failure for Friday to regain the $1.1042 resistance level was telling and brings questions as to the longevity of this rally.

For now, we remain somewhat in limbo, where a closed hourly candle above $1.1042 would bring a bullish outlook and a closed hourly candle below $1.0925 would bring a more bearish outlook. The pair has to contend with both trend line support and $1.0934 support levels before trying to reach the crucial $1.0925 neckline. Conversely, resistance levels on the way to $1.1042 are $1.0981 and $1.1031.

GBP/USD retracement unlikely to last
The bullish outlook remains for GBP/USD, despite a somewhat weak start to the morning today. The uptrend in play throughout December is clearly still in play and thus it is a case of watching to see when the uptrend will resume.

Support levels which could potential push price higher are $1.5159, $1.5125 and trendline support – currently $1.5138. Resistance levels of note upon breaking higher would be $1.5202 and $1.5241. This bullish view remains unless price posts an hourly close below $1.5111.

USD/JPY resurgence following selloff
USD/JPY is moving sharply higher this morning, following off from a strong selloff on Friday. With price having broken below the ¥122.30 and now ¥121.07 support levels, this current resurgence is unlikely to last and thus it is worthwhile looking for bearish signals within this rally.

Resistance levels of note are ¥121.87 and ¥122.02, while support levels are at ¥121.24, ¥121.07 and crucially ¥120.58. This bearish view would only be negated with an hourly close above ¥122.30.

USD/CAD weakness temporary
USD/CAD is selling off sharply, in a very clear countertrend move. Unlike USD/JPY and GBP/USD, this story is of dollar weakness and thus it has more to do with how oil prices have weakened the CAD.

With expectations of a trend continuation in oil (weakness) and thus USD/CAD (strength), there is likely to be another move higher for USD/CAD in the near future back towards C$1.3758. Thus this current move looks like a temporary retracement lower which would be expected to bring another rally in the near future.

Key support levels of note are C$1.3650 and C$1.3631, while resistance beyond C$1.3758 is difficult to find. This bullish view holds unless we see an hourly close back below C$1.3631.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.