The EURUSD carved out a new low yesterday evening at 1.2816 following Monday's low at 1.2822. Despite not falling significantly below the previous low, this paints a bearish technical tone for the pair. We continue to slip lower and so far all upside rallies have been sold down aggressively. The pair is now at 1.2861 bouncing off the bottom, a failure to break above 1.2900 indicates a resumption of the downtrend and a clear break above 1.2900 will be the first step of a possible move higher. Recovered overnight from a new year one year low on Friday at 1.2820, to touch 1.2870. As long as the price holds above the low of 1.2815 we may see a correction phase in the EURUSD. A breach below of the 1.2815 and a new low will signal a continuation of the downtrend.
At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish. This morning French Flash Manufacturing PMI printed better than expected at 48.8 vs 47.1 expected. German Flash Manufacturing declined to 50.3 vs expected 51.3. Therefore mixed outcomes across the Eurozone's two largest economies, the market reaction to these releases was muted.
EURUSD Support areas include 1.2815, 1.2775, 1.2675 followed by a key support at 1.2550. Resistance levels above are at 1.2900 1.2959, 1.30 figure level, followed by 1.3165.
The GBPUSD has moved lower after testing the 1.6400 figure level and is now back at 1.6335. The GBP of late has been trading alone with a big focus on the Scotland Referendum and has not been in full sync with other major pairs. Whereas the EURUSD and AUDUSD are at lows and USDJPY at highs, i.e. the USD is at highs versus these currencies, the cable is 2% higher than last week's lows. It remains to be seen if the pound will follow the trend in the fx market or if further moves will be divorced from the broader dollar strength tend. Today we await BBA Mortgage Approvals and Public Sector Net Borrowing out of the UK and Housing and Manufacturing data out of the US this afternoon.
GBPUSD support areas include 1.6300, 1.6250, 1.6150, 1.6100, 1.6000, 1.5900, and 1.5850. Resistance levels and upside targets at 1.6365 and 1.6500, 1.6600, 1.6750.
USDJPY has declined from the new highs above 109.00 and is trading at 108.42. 109.46 on the 19th of this month is the high (6year high). Today is a Bank Holiday in Japan, although all other major economies and stock markets are in action as usual. 107.39 on the dollar/yen will be a key support area. Incidentally the pair is up 9% in two months. Any pullbacks could be swift and sharp. At present the dollar is rampaging against most majors and also against Gold and to a lesser extent Crude Oil. Next economic report out of Japan is the Flash Manufacturing PMI at 01:45 GMT Wednesday.
Support levels for USDJPY can be seen at 108.00, 107.00, 106.65, 106.00 and 104.65. Resistance to the upside at 108.50, 109.00 and of course big level at 110.