By: Christopher Lewis

GBP/USD

GBP/USD had an interesting week as the battle between bulls and bears continue to intensify in the 1.55 area. The support level actually runs from the 1.53 to 1.55 area, as it is a 200 pip support zone. The area is also the “neckline” of a massive complex head and shoulders that would signal a massive selloff coming if it were broken to the downside. The weekly candle looks a bit like a hammer, but the previous candles over the last few weeks we shooting stars, and suggests that this area is going to be massive for the future direction of this pair. The pair does look weak however, and we think that a breakdown is more than likely than not.

AUD/USD

AUD/USD originally fell during the week, but managed to have a pop in the last couple of sessions, showing underlying strength. The weekly candle is a hammer, but the recent trend has been decidedly bearish. The pair also looks as if it is in a triangle, and ready to break. The upside looks more likely as the pair has support all the way down to the 0.95 – a long way below currently levels. A break of the top of the triangle sends this pair much higher.

USD/CAD

USD/CAD fell during the week as the oil markets got a bit of a bid. The Iranians shook the markets up during the week with threats of closing the Strait of Hormuz; however that was quickly brushed aside as the US Navy’s 5th Fleet made is obvious that the closure wouldn’t be tolerated. The Saudis also managed to calm down the oil markets as they pledged to make up any lost production at the hands of the Iranians.

The Canadian dollar is always sensitive to oil markets, so this has been causing choppy conditions. However, the most recent action has seen a gradual grinding higher in this pair, and I believe this will continue as the pair consolidates over the next few weeks. The Dollar continues to be the currency everyone wants to own, and this will push this pair higher.

EUR/USD

EUR/USD fell again for the week, and has broken below the 1.30 support line. The area is actually over 100 pips thick, and the 1.29 level would have to give way to give the “all clear” for selling. The markets are very concerned over the bond issues in places like Italy, and as a result the Euro should continue to suffer over the long term. The rallies in this pair should be sold as all of the headline risks seem to be to the downside. A breaking below the 1.29 level sends this pair down to the 1.25 level.

EUR/JPY

EUR/JPY fell hard for the week as the Euro continues to get pummeled against many of the world’s currencies. The Yen was especially strong on Friday, and the pair has broken down through the 100 level. The breakdown most certainly signals further weakness going forward, and the situation in Europe can give no real comfort to anyone wanting to own the Euro. The pair will continue to offer selling opportunities on rallies going forward. The Bank of Japan has been selling the Yen in interventions recently, but the USD/JPY pair will more than likely be the trigger for that action. As long as the USD/JPY pair doesn’t melt down, this pair should be safe to sell.