EURUSD (1.1): The single currency staged a strong turnaround off the lows near 1.0877 and broke the support/resistance region near 1.0977 through 1.0948 to post highs near 1.11890. However, this level proved to be strong enough of a resistance as prices turned lower. It also marked a second retest of the previous rising trend line with a confluence of the minor horizontal resistance at 1.1133. We can now expect to see another retest back to 1.0977 – 1.0948 for a test of support. It also marks the break out level from the falling price channel which could point to a potential upside move in the near term. Price action at 1.0977 – 1.0948 will be critical in the aspect that failure to support prices here could see EURUSD turn bearish and point to a likely decline to 1.0815. Alternatively, if support holds, expect another retest to 1.1133 region ahead of further gains to 1.148.
GBPUSD (1.55): The Cable has been in a prolonged sideways range now spanning across close to a month. Prices have stalled near 1.566 region of resistance while to the downside, there is a possible test back to lower end of the range at 1.544. The minor range high and low sits between the resistance at 1.5685 – 1.5779 while to the downside, support comes in at 1.52150. A break below 1.544 could potentially set the stage for a decline down to 1.5215, but we expect this ranging price action to continue which could be broken only on some very high impact market news.
USDJPY (124.3): USDJPY has been moving very slowly after finding support at 123.3. Price briefly tested the highs near 125.18 before declining lower from these highs. Minor support comes in at 124.23 through 124 ahead of the major support at 123.30. To the upside, a break above 125.18 will open the way to a test of previous highs at 125.650. Readers should note the potential rising triangle/wedge pattern being formed, which if broken could see an eventual decline to 120.750 in the longer term, provided support at 123.305 gives way.
USDCAD (1.31): USDCAD has failed to make any major gains after breaking out from the ranging price action between 1.306 through 1.29. We could therefore expect to see this sideways price action continue on for a while with prices bouncing off the range highs and lows. There is however a pending retest to the broken resistance near 1.27925 – 1.26975 for a test of support, which could take place only on a breakdown from the sideways range.
US Dollar Index (96.8): The US Dollar Index has been drifting lower after breaking the support below 97.35. However prices failed to test the lower support at 95.85 and instead saw a reversal with prices settling above 96.55. This could potentially see a test back to the previous broken support at 97.35 to establish resistance. If this is the case, the US Dollar index could dip back lower towards 96.55 and eventually for a test to 95.85 support.