EUR/USD pulls back to major support level. Meanwhile, USD/JPY and USD/JPY look to carry on where they left off on Monday.

Dollar and pound
Source: Bloomberg

EUR/USD pulls back to crucial support level

The volatility seen over the past week has provided a massive boost to the unlikeliest of recipients, with many speculating that the euro is now taking on ‘safe haven’ properties. Nevertheless, the important thng to note is that we have seen price push past a crucial area of resistance, between $1.1467 and $1.15. The $1.1467 level reflects both a double-bottom projection, along with the mid-May peak. Thus, this level is going to be very important to today’s trading and initial signs are that we could see a bounce.

The previous candle moved higher from this support level and thus given the significance of this recent break higher, coupled with clear respect of this level, I am bullish as long as price remains above $1.1467. Resistance levels to watch would be $1.1562 and $1.1715.

 USD/JPY bearish engulfing points to renewed losses

USD/JPY has suffered significant losses over the past week, with the flight to the safety of the yen. However, there is also a major long-term trendline dating back 1990 to watch out for and price seems to have reversed lower from that point.

For the time being, we have seen price fall out from the recovery seen following Monday’s massive selloff. We are now back to creating new lows and lower highs, which I believe will continue today, given the bearish engulfing candlestick pattern seen this morning. I am thus bearish for a move back down to ¥118.54 unless price moves back above ¥119.9.

USD/CAD pulls back to interesting support level

USD/CAD has been trading nicely higher this week, yet the pullback we have seen this morning could provide a good place for further upside around the C$1.3298 mark. Of course we could easily see a move lower and remain bullish, yet the creation of a doji at a clear support level gives a short-term possible bounce.

Thus I am bullish for a move higher from C$1.3298, for a move back towards C$1.3355. In the short-term I would abandon my hopes of a bounce in the near-term if we move below C$1.3285. However, I will remain bullish for the medium-term as long as price remains above C$1.3142.

CAD/JPY looks to carry on weak trend

One of the weakest currencies (CAD) has been pit against one of the strongest (JPY) in the past week. In a similar manner to USD/JPY, the recovery sell off seen following Monday has now looked like weakening again, with price starting to sell off from the 50% retracement and posting a bearish engulfing. Therefore I am bearish for a move back to ¥88.77, unless price moves back above ¥90.06.

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.