Euro repeating ECB pattern?
In October Mario Draghi hinted that policy could be changed at the December, this caused a strong selloff and continuation until the meeting, come the meeting there was no more selling to be down and the move reversed. Could we be seeing the same again? In January Draghi again hinted (less strongly) policy could again be changed and with -0.2% EU CPI early this week the market now has reason to think more stimulus can be added. Uptrend has been broken and until a move back above trend and 1.0967 occurs a fall to 1.0775 and 1.0709 looks very much on the cards.
Yen - a familiar reversal pattern
A familiar reversal candlestick pattern is present again in USDJPY (see arrows). It occurs when a move down on increased volume then closes above the day's open (known as a hammer).This then followed by a strong move to the upside to previous resistance,currently we are seeing such a move and with yesterday's bullish engulfing candle the next targets for the Yen are 114.88, 115.96 and 116.46 where I would expect to see strong resistance and a pull back.
USD CAD needs to find some buyers
The last week has seen further CAD strength in spite of general Dollar strength. This was helped yesterday by a large GDP beat 0.8% v 0.0% expected, taking USDCAD through key support at 1.3457. Today we are witnessing a bounce back to test the level again, if buyers do not come back above the level and get a close above today we would expect further downside into the large range 1.3457-.3033. A close above may see the end of recent selling pressure and indicate a move to 1.3635 low and trend line.
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