The EUR/USD is trading up 0.3% at around $1.2270 against the US Dollar as the global equity markets stabilized after heavy losses last week. The US Dollar has also retreated from its highs of last week. With the Japan off for national holidays and the economic calendar almost empty, sentiment and technical’s are set to drive the market this week. Overall, the uptrend is firmly intact and the market is expected to be well supported ahead of the next upside extension to challenge that falling trend line resistance off the record high from 2008. But for now, the Euro has entered a period of short-term correction, which could see a drop back into major previous resistance turned support.
USD/CAD rallied last week as everything went against the loone. The stock market collapse hurt the Canadian dollar, as Oil prices suffered from the sell-off in stocks and also from rising US production. Canada lost no less than 88K jobs in January, although this came after two excellent months beforehand and wages increased nicely.
The GBP/USD is trading up 0.2% at around $1.3850 against the US Dollar, with no important market data scheduled for Monday. The UK Prime Minister Theresa May is set to present “the Road to Brexit” in a speech coming up soon. The attempt of the UK Prime Minister is to bring the divided government back together and come up with a solid plan for further Brexit negotiations. A double top has triggered on the daily chart which opens deeper setbacks towards a pattern objective that coincides with the 2017 high, a previous resistance turned support level. This Tuesday sees the UK dropping their CPI data for January. A positive beat to inflation data could see the bullish trend on GBP/USD begin a new, assuming risk aversion doesn’t take hold of markets again, sending traders scurrying into safe haven assets.
The odds are stacked in favor of a corrective rally in USD/JPY, technical charts indicate, although Wednesday’s US CPI release could play a huge factor. On Friday, bears failed to cut through the trendline sloping upwards from the 2011 low and August 2016 low. A doji candle at trendline support was printed on Friday and this indicates indecision in the market ahead of the all important US CPI release later this week.
This, coupled with a rebound in the US equities could lift USD/JPY above 109.00 levels. A positive close today, preferably above 109.00 would confirm the bull doji reversal and open doors for 110.48 (Feb. 2 high). A move to 110.48 or above looks likely on the back of strong US inflation numbers (this Friday).
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