Mysticforex

USD/CAD came within whisker of testing the multi year highs only to recede from the 1.2800 level yesterday but markets are clearly concerned about the state of Canadian economy which has been badly battered by the decline in energy prices. With oil prices slipping once again to $46/bbl crude continues to weigh on the loonie. But tomorrow's Canadian labor data may hurt the currency as well. The market is expecting a decline of -3.5K from 35K gain the month prior, but if the results are even worse than expected the BOC will have to reconsider its moratorium on further easing and that could push USD/CAD to fresh highs.

Taking a look at daily chart, the next level of resistance is at 89 the 50% Fibonacci retracements of the December to February decline. Then above that will be the big psychological resistance of 90. As long as NZD/JPY holds today’s low of 87.25, the turn is intact otherwise the currency pair could slide down to the 23.6% of 86.45.

Technically the pair has found support at the 7200 several times and that figure now represents very strong base and a break there would be a significant fracture that could push it to the .7000 level. The upside meanwhile is capped by .7500.

[ATTACH][/ATTACH]Five days have past without a rally in EUR/GBP and further losses are likely. The European Central Bank just started buying bonds today as part of its EUR 1.1 trillion program to stimulate the Eurozone economy at a time when the Bank of England is preparing to raise interest rates. We have to turn to the monthly chart of EUR/GBP to find key levels since there is no major support until 70 cents. As for resistance, the currency pair just broke below the 61.8% Fibonacci retracement of the 2000 to 2008 rally at 0.7260. This former support is now resistance and its importance is reinforced by the fact that the currency pair also topped out at this level back in 2003.

How Low Will EURO Go? One of the worst performing major currency pairs this year is the EUR/USD. Since Jan 1, the euro lost approximately 10% of its value against the U.S. dollar and is now trading at an 11 year low. Despite the improvements in Eurozone data including this morning’s German industrial production report, the EUR/USD has been hit hard by reality that the ECB will begin buying bonds on Monday at a time when the Fed is preparing to raise rates. The EUR/USD could remain under pressure as rate hike expectations build into the March 18th FOMC meeting. A weaker euro is good for Europe in the long run but the widening divergence in monetary policy expectations could force the currency pair down to its September 2003 low of 1.0765 before there is any stabilization. As expectations for Fed tightening continues to build, we could even see a move down to 1.05 and with only Eurozone industrial production and the German trade balance scheduled for release next week, the path of least resistance for the EUR/USD should be downwards. Taking a look at the monthly chart of the currency, the EUR/USD has blown past all Fibonacci support levels including levels drawn from the launch of the euro. The September 2003 low is important because it was support back in 1991. If this level is broken, the 1991 swing low of 1.06 should be the next key level to watch. The 61.8% Fibonacci retracement of the 2000 to 2008 rally near 1.12 is resistance. The downtrend would only be negated on move back above this level.

Technically the AUD/NZD has found a sound double bottom at the 1.0300 level and only a break below 1.0250 would signal a potential drive lower towards parity. Meanwhile a break above the 1.0600 figure would negate the bearish bias in the pair

Technically USD/JPY continues to travel the path of volatility compression as it makes a series of higher lows and lower highs that signal a breakout one way or the other. A move above 120.00 opens the way for a run through 121.00 while a break below 118.00 could put it on a path to test the 116.00 double bottom.

AUD/USD Breakout ? The Australian dollar is prime for a breakout and we’ve got the perfect catalyst tonight with the Reserve Bank of Australia’s monetary policy announcement. The Australian dollar traded lower on Monday, signaling that investors are positioning for a rate cut and even though 18 out of the 29 economists surveyed by Bloomberg also expect the RBA to ease, a rate cut is not a done deal. There has been just as much improvement as deterioration in Australia’s economy. For example, while the labor market weakened, private capital expenditures plunged and manufacturing activity in the month February contracted at its fastest pace since July 2013. We feel that there hasn’t been enough broad based deterioration to warrant back-to-back easing. China’s decision to lower interest rates in reaction to weaker economic reports makes the RBA’s decision even more complicated.

Taking a look at the daily chart of GBP/USD, there is an upward sloping channel that points to a recovery in the currency. While sterling tested the bottom of the channel on Friday, it is likely to bounce off that level and make a run for resistance near 1.56.

Can USD/JPY take out 12000 ? Today's hotter than expected CPI data and strongest wage growth since 2008, put a relentless bid into the dollar today reversing its weakness of yesterday as traders once again began to price in the prospect of possible June rate hike. USD/JPY which just yesterday looked like it was going to dive lower, climbed steadily throughout the day and ended up on the day's highs as markets once again turned bullish on dollars. Tomorrow this rally could extend further if the US GDP data surprises to the upside. The market is expecting the number to print at 2.1% versus 2.6% the quarter prior but the data shows a 2.5% growth rate it would only add to the pressure for Fed to begin normalization and would easily push USD/JPY back through the 120.00 figure. Technically USD/JPY continues to make higher lows which is bullish, but it is also constrained by lower highs on the upside which means that a break and hold above the 120.00 mark will be crucial to reestablishing the upward trend

Cable has shown relative strength since the start of the week and may push towards the 1.5600 level as the day progresses. Today brings the second day of Ms. Yellen’s testimony and while she is unlikely to add anything new, if she reiterates her caution on the timetable for normalization, the dollar selloff could accelerate as the US session proceeds with EUR/USD possibly testing 1.1400 while sterling eyes the 1.5600 level.

Peak GBP/CAD? The flameout at the key 1.9500 level suggests that GBP/CAD may have set a near term top. The pair finds its first support near the 1.9000 level while only a move through the 1.9600 figure reestablishes the uptrend.

Between Fed Chair Janet Yellen’s testimony on Capitol Hill, ECB President Mario Draghi’s testimony on monetary policy and the Eurogroup’s decision on Greece’s reform plan, tomorrow will be a big day for the EUR/USD. From both a technical and fundamental perspective the currency pair has been itching for a breakout and waiting for a catalyst to set it on a new direction. We know that the EUR/USD is deeply oversold and short positions are stretched but with the ECB increasing stimulus and the Fed looking to raise interest rates, there is a reason why the EUR/USD is trading at its current levels. How the EUR/USD trades on Tuesday and the days ahead will be determined by whether the gap between Eurozone and U.S. policy widens or narrows. If Yellen talks about tightening and Draghi emphasizes the need for easy monetary policy, the currency pair will break to the downside but if Yellen sounds less eager to raise rates and Draghi seems more comfortable with regional risks now that Greece has received an extension, a short squeeze could finally drive EUR/USD higher.

EUR/USD – Time for a Breakout Taking look at the daily chart, the consolidative triangle pattern is clear. If the EUR/USD breaks the top of the triangle, the next stop should be 1.1645, a former support turned resistance level. If it breaks the downside and takes out 1.1275, the next area of support is at the 11 year low of 1.11.

GBP/USD Still Aiming for 1.56 The rally in the British pound on Friday was halted by surprisingly weak consumer spending numbers. Despite the decline in the unemployment rate and an increase in wages, retail sales fell 0.3% at the start the year. January is typically a softer month for spending and so excluding auto and gas purchases, retail sales dropped 0.7%. Earlier this week we learned that CPI dropped by the largest margin ever but even with today’s weaker report, we still believe that the Bank of England is on track to raise rates towards the end of the year. More importantly, we believe that the latest pullback in sterling represents an opportunity to buy GBP/USD at a lower level. There are not many U.K. economic reports scheduled for release next week, which means the performance of sterling will hinge upon the market’s appetite for U.S. dollars and euro. Just remember that the overall outlook for the U.K. remains positive so if there is a rally in EUR/GBP, chances are, it may not last. The currency pair remains in an uptrend and within the two upper Bollinger Bands. Support is at the 23.6% Fibonacci retracement of the 2007 to 2009 decline near 1.5330. Resistance is not until 1.56.

It is quite rare to see a trend which lasts this long. Illustrating the intensity of the bear market, there has been very little time the market has traded above the 9 week SMA. However, since making the low under the 1.11 handle four weeks ago, the pair has traded higher in each of these periods. While the market is trading better, it is still trading beneath that average at about 1.1580.

USD/CAD has formed a clear triple top with lower highs suggesting that upward momentum is no longer there. The 1.2800 level remains the operative resistance to the topside while 1.2000 is most immediate near term support.

USD/JPY in the crosshairs. The technical picture in the pair is as uncertain as the fundamental one. On the negative side the pair continues to make lower highs, but on the positive side its is making higher lows. Such tight compression of price action typically leads to a breakout one way of the other. On the upside the key level remains the 120.00 figure while on the downside the 116.00 is vital support.

EUR/USD Ready for a breakout? Taking a look at the daily chart EUR/USD is definitely prime for breakout and it looks like it's testing the top of its range with an upside breakout likely. If your dollar breaks one 1.1450 the next resistance is 1.15 followed by 1.1640. If your dollar brakes below 1.1270 the next support will be the 61.8% Fibonacci retracement of the 2000 to 2007 uptrend at 1.1220.

With 7625 now forming a double bottom the pair looks set to push higher with next resistance at the 7800 level while much bigger resistance at 8000 would likely cap the rally.

Taking a look at the daily chart of USD/JPY, the break above 120 puts the currency pair on track for further gains. However there are a 2 main resistance levels to be mindful of – 120.80 and 121.85. These levels halted previous rallies in the pair. Support is at 120.

While oil consumers get a bonus, the producers income takes a hit. Recently Canada had been producing and exporting over 3 millions barrels of oil per day to the US. A 50% reduction will negatively affect the Canadian balance of trade and slow their economy as investment and employment in the oil patch slows. Their currency, in part because of the energy price, has been depreciating. We have two apparent mega trends, demand for safe haven pounds and a disdain for the Canadian Dollar. Since November the GBPCAD has soared from 1.75 to 1.9250. This is a big move, but if we look at a monthly chart the pound may be breaking out, with blue sky above, and perhaps as much as another 1000 pips or more if the fundamental trends continue.

EU hopes fading, but short term deal still possible. neither side seems to be showing signs of compromising. Already, German Finance Minister Schaeuble declared that there were no plans to discuss a new accord or give Greece an extension to its bailout funds. Even Eurogroup chairman Dijsselbloem, who’s been a staunch supporter of coming to a negotiated agreement on the Greek situation, noted that any solution would take some time, dashing hopes of a long-term fix today.

GBP/AUD Technically the pair is on the verge of a multi-year breakout and a move through the 1.9700 level could open a run towards the key 2.000 level. Meanwhile support rests at 1.9400 and even stronger support at 1.9000.

Breakout? Which way? Taking a look at the daily chart of USD/CAD, the February low of 1.2352 is currently support. If this level is broken, there is no major support until 1.2115. As for resistance, if 1.26 is broken, it should be smooth sailing up to 1.28.