Key levels across Major FX pairs
DXY – The dollar had a big drop yesterday (just over half a percent), today the picture is more mixed. The price candle has developed a long wick to the downside showing some buying pressure has come back. It was important that today’s candle didn’t take out the lows of January 22nd around 90.05. Price came very close to the previous broken downtrend line from March and for the bulls price hasn’t closed below the light blue 50-day SMA. The RSI needs to hold above 45 support as indicated by the white horizontal line. If inflation out today beats expectations we could see yields move higher and the dollar catch a bid to resume its upward trend. We also have Jerome Powell speaking later and a US 10 Year bond auction.
GBPUSD – Cable cleared the all important 1.375 level and is now comfortably above 1.38 with 1.40 now as the next target for Cable bulls. The RSI is back up at previous resistance it has struggled to overcome in the past at 65, but is not severely overbought. Still looks ripe as a buy the dips pair with previous resistance at 1.375 and the pink 21-day EMA offering potential entry points. We have Governor Bailey speaking later.
EURUSD – The euro had broken below important support around 1.205 and the uptrend line from March, however, these levels have been reclaimed and now price sits around 1.211. Price is now a bit sluggish as it runs into some resistance around the light blue 50-day SMA and the RSI at 52. The next price hurdle for euro bulls is 1.217. News out of Germany showed lockdowns may be kept in place till the 15th of March. Over in Italy, it looks increasingly likely that Mario Draghi will become Prime Minister.
USDJPY – With the failure of US 10 year yields to clear the 1.2% level. USDJPY has pared back gains, but importantly is holding the 104.4 support level and the pink 21-day EMA. The small white uptrend line of the ascending channel has not been breached and the RSI has turned upwards. RSI support sits at 46.3. There was some news flow out that the BoJ’s March policy review may be used to clarify that there is more room to lower rates further.