EUR/USD
The euro posted its second straight week of losses against the U.S. dollar. The bears managed to break the annual support around 1.0350 and the breakout has not yet been tested. The market is in a strong downtrend and for now the bulls are unable to even trigger a deep pullback. On Friday, the pair was close to parity with a low at 1.0071. The recovery was then capped by the resistance at 1.0186, with the bearish pressure likely to continue. First daily support for the pair is 1.0115 and the next one is the low at 1.0071. This week, the market may test the breakout of the 1.0350 zone, but it will also need support from the macro environment to trigger a rally. Sentiment remains negative and the more likely scenario for the pair is a decline to 1.0071 and 1.0000 subsequently. No significant events are expected in the economic calendar today.
USD/JPY
The dollar demonstrated strength against the Japanese yen and early this morning the pair broke through the resistance at 136.70. Expectations are for a test of the breakout zone. If the breakout is validated, a rally to 138.00 is possible. In its attempts to limit bond yields, the Bank of Japan appears to have lost control of the currency markets, and they are clearly reflecting the stress from credit markets. In a longer term, an attack on the top of the summer of 1998 at 146.80 is not excluded. In alternative scenarios and the rally petering out, the break of 136.70 could prove to be false. For now, there are no fundamental factors to reverse the uptrend, but technically a deeper correction to 131.70 can be observed. First supports for the bulls are 136.70, 136.00, 135.30 and the most important of the series is at 134.24.
GBP/USD
The Sterling is also struggling against the strong dollar. Last week, declines remained limited around support at 1.1910, with this area also being the first daily support. First resistance for the bulls is the area around 1.2045 and the weekly resistance is at 1.2170. The downtrend remains strong and any rallies should be sold off. If the 1.1910 support is broken, a drop to 1.1700 can be expected. The higher frames show that prices are still above the annual support around 1.1910, which does not rule out deep corrections. If the Sterling follows the Euro weakness, this zone could be broken, opening the door for deeper declines towards 1.1470 – the March 2020 low.
EUGERMANY40
The German index managed to end last week with a small gain. Losses in the early hours today brought prices back around last week’s opening levels. It is likely that the rally of the previous days will lose its strength and the bearish pressure will continue. The market is trading in a descending channel and sharp rallies are followed by equally relentless declines. For this cycle, the upper limit of the channel is around 13035 and it is possible that prices will reach it before the real attack of the bears. The first support for buyers is the area at 12875, with the next more significant one being at 12620. It is possible that the market will also form local support around 12750. It is characteristic of the price channels that supports and resistances are violated, and in such situations a good indicator for the areas of interest remain the extreme points of the market.
US30
The recovery of the U.S. blue chips remained capped by the resistance at 31425. Prices are likely to test the support at 31150 and, if it fails, the declines are likely to deepen with a target of 30430. First significant resistance areas are 31425 and 31700. Expectations remain rather negative and an eventual growth may prove unsustainable. The U.S. markets are on the cusp of corporate earnings season and the volatility is likely to remain high in the coming weeks.
