· EUR/USD fell late in the week after a dovish ECB press conference, and could have significantly more room to fall on a sustained breakdown below key 1.0800 support. Technical bias: Bearish
· USD/JPY hit a one-year low at 116.00 on global market volatility but rebounded above 118.00 late in the week as markets stabilized. Technical bias: Neutral to Moderately Bearish
· GBP/USD made an oversold bounce after hitting a new multi-year low, but continues to trade within a sharp bearish trend.Technical bias: Moderately Bearish
· USD/CAD has pulled back sharply after having overextended its uptrend to extreme highs, but the bullish trend currently remains intact. Technical bias: Moderately Bullish
EUR/USD spent the past week continuing its recent consolidation above the 1.0800 support level. On Thursday, however, the euro resumed a more bearish stance after European Central Bank (ECB) President Mario Draghi held a press conference during which he made some rather dovish comments, hinting that the ECB may adopt a more aggressive easing stance going forward. Draghi stressed that the ECB would be ready and willing to act, if warranted, by implementing the many tools at its disposal. This brought EUR/USD back down to hit the noted 1.0800 support. With an increasingly dovish ECB set in stark contrast to a potential Federal Reserve monetary tightening cycle, the longer-term bias for EUR/USD continues to be bearish in line with the well-established long-term downtrend for the currency pair. With any sustained re-break below 1.0800, the next major target remains at the major 1.0500 support level, last approached in early December. Further to the downside, any confirmed continuation of the downtrend momentum should then begin to target the 1.0200 support level.
In the middle of this past week, USD/JPY fell to a one-year low on sharp plunges in global stock markets. This low was a continuation of the steep drops that have pressured the currency pair since mid-December. This past Wednesday, USD/JPY hit major support at the 116.00 level before bouncing. Towards the end of the week, however, as equities began to stabilize and rise, which was largely due to the ECB’s strong indication of additional easing, USD/JPY rebounded back above major resistance around the 118.00 level. Despite this strong rebound, however, risk of further volatility in the global financial markets remains. Any subsequent market instability that leads to additional asset flows towards the yen could place more pressure on USD/JPY. Currently, the noted 118.00 price area is the key level to watch. Sustained trading back under 118.00 on global volatility should once again target the lows around the noted 116.00 support level, followed by the 114.00 level. Major upside resistance in the event of an extended rebound resides around the key 120.00 level.