Weekly Preview & Outlook Forex Currency Pairs

EUR/USD Weekly Outlook

Despite initial dive to 1.3145, EUR/USD lost downside momentum and recovered since then. Note that while further recovery cannot be ruled out yet, near term outlook will remain bearish as long as 1.3689 resistance holds. Recent decline is still in favor to continue. Below 1.3241 minor support will flip bias back to the downside and should sent EUR/USD through 1.3145 to 161.8% projection of 1.4939 to 1.3969 from 1.4548 at 1.2979, which is close to 1.3 psychological level. However, break of 1.3689 will confirm short term bottoming, on bullish convergence condition in 4 hours MACD and should bring stronger rally to 1.3936 and above.

In the bigger picture, medium term rise from 1.1875 has completed with three waves up to 1.4939 already. Also, it's merely part of the consolidation pattern that started back in 2008 at 1.6039. Further decline would be seen to 1.2873 support first and break will target 1.1875 and below. On the upside, above 1.4548, resistance is needed to confirm completion of the fall from 1.4939 or we'll stay bearish in EUR/USD.

In the long term picture, EUR/USD turned into a long term consolidation pattern since reaching 1.6039 in 2008. Such consolidation is still in progress and we'd expect range trading to continue for some time between 1.1639 and 1.6039.

USD/JPY Weekly Outlook

USD/JPY is still bounded in choppy sideway trading last week and outlook remains unchanged. Such consolidation from 75.94 could extend further and another rise cannot be ruled out. But upside is expected to be limited by near term falling trend line (now at 77.59) and bring fall resumption eventually. Below 76.11 will turn bias back to the downside and break of 75.94 low will confirm resumption of whole fall from 85.51 and would target 70 psychological level.

In the bigger picture, USD/JPY is still staying well inside the falling channel that started back in 2007 at 124.13. There is no indication of trend reversal yet even though medium term downside momentum is diminishing with bullish convergence condition in weekly MACD. Such down trend is still in favor to continue to 70 psychological level. In any case, break of 80.23 resistance is first needed to indicate completion of fall from 85.51. Secondly, break of 85.51 is needed to be the first signal of medium term reversal. Otherwise, we'll stay cautiously bearish in the pair.

In the long term picture, current decline suggests that the long term down trend in USD/JPY is still in progress. Such down trend is expected to extend further into uncharted territory with 70 psychological level as next target. In any case, we'd at least need to see sustained break of 85.51 before considering trend reversal.

GBP/USD Weekly Outlook

Despite initial dip to 1.5271, GBP/USD rebound strongly since then. Initial bias is neutral this week and some consolidations would be seen between 1.5271/5715. But after all, break of 1.5715 is needed to confirm short term bottoming. Otherwise, we'll stay bearish and expect another decline sooner rather than later. Break of 1.5271 will target 161.8% projection of 1.6746 to 1.5780 from 1.6618 at 1.5055 next. Though, break of 1.5715 will likely bring stronger rebound, possibly towards 61.8% retracement of 1.6618 to 1.5271 at 1.6103 before staging another decline.

In the bigger picture, rise from 1.4229, which is treated as the third leg of consolidation from 1.3503 (2008 low) should be finished at 1.6746 after GBP/USD completed a head and shoulder top reversal pattern (ls: 1.6298, h: 1.6746, rs: 1.6618). Fall from 1.6746 could be the fourth leg of the consolidation pattern from 1.3503 (2008 low) or resuming long term down trend from 2.1161 (2007 high). In either case, retest of 1.4229 support should be seen. Break of 1.4229 will bolster the down trend resumption case and would possibly push GBP/USD through 1.3503 low. On the upside, break of 1.6618 resistance is needed to invalidate this view. Or we'll now stay cautiously bearish in GBP/USD.

In the longer term picture, the corrective nature of the multi-decade advance from 1.0463 (85 low) to 2.1161 as well as the impulsive nature of the fall from there suggests that GBP/USD is now in an early stage of a long term down trend. Another low below 1.3503 is anticipated after consolidation from 1.3503 is confirmed to be completed. 

USD/CHF Weekly Outlook

USD/CHF's upside momentum was not too convincing last week but it did manage to extend recent rally to as high as 0.9315. Further rise will remain in favor as long as 0.9145 minor support holds. Rebound from 0.7065 is still in progress for 161.8% projection of 0.7065 to 0.8246 from 0.7710 at 0.9621 next. Nevertheless, break of 0.9145 will indicate that a short term top is likely formed and should flip bias back to the downside for 0.8647 support and possibly below.

In the bigger picture, medium term down trend from 1.1730 is already completed at 0.7065. But there is no indication of long term reversal yet. Rebound from 0.7065 is treated as part of a medium term consolidation pattern. Such rebound would possibly extend to 0.9916/1.1730 resistance zone. But strong resistance should be seen there and bring reversal. On the downside, break of 0.8246 resistance turned support will indicate that rebound from 0.7065 is finished and should turn outlook bearish for a retest on this low.

In the longer term picture, long term down trend from 2000 high of 1.8305 is still in progress and there is no indication of a reversal yet. Such down trend would still extend to 100% projection of 1.8305 to 1.1288 from 1.3283 at 0.6266 after finishing the consolidation from 0.7065.

AUD/USD Weekly Outlook

Despite diving to as low as 0.9387 last week, AUD/USD drew strong support from 0.9404 key level and rebounded. A short term bottom should be formed and further rise is in favor initially this week to 0.9984 resistance first. Break there will extend the rebound toward near term channel resistance (now at 1.0449). On the downside, below 0.9621 will turn bias neutral and bring deeper retreat. But we won't turn bearish again before decisive break of 0.9387 low.

In the bigger picture, focus remains on 0.9404 key support level. As long as this support holds, price actions from 1.1079 is treated as a correction, or part of a consolidation pattern to the up trend from 0.6008 only. And, in such case, AUD/USD should still made another high above 1.1079 before forming an important top. However, sustained break of 0.9404 will indicate that rise from 0.6008 is already finished and would possibly bring deeper fall towards 61.8% retracement of 0.6006 to 1.1079 at 0.7945.

In the longer term picture, whole up trend from 0.4773 (01 low) extended to a point where it just missed 100% projection of 0.4773 to 0.9849 from 0.6008 at 1.1084. While AUD/USD might be reversing in medium term, there is no signal of long term topping yet. We'd stay bullish as long as 0.9404 support holds and expect an eventual break of 1.1084 to 138.2% projection at 1.3023, which is close to 1.3 psychological level, in the long term.

USD/CAD Weekly Outlook

USD/CAD jumped to as high as 1.0656 last week but formed a short term top there, on bearish divergence condition in 4 hours MACD, and retreated. Initial bias is neutral this week as some more consolidation could be seen. But at this point, we'd expect strong support from 1.0179/91 (50% retracement of 0.9725 to 1.0656 at 1.0191 and 38.2% retracement of 0.9406 to 1.0656 at 1.0.179) to contained downside. Above 1.0482 will flip bias back to the upside for retesting 1.0656 resistance first.

In the bigger picture, that down trend from 2009 high of 1.3063 has finished at 0.9406 on bullish convergence condition in weekly MACD. Current rally from 0.9406 should target 1.0851 resistance (38.2% retracement of 1.3063 to 0.9406 at 1.0803). Break there will extend the rebound to 61.8% retracement 1.1666 and above. On the downside, break of 1.0009 support is needed indicate completion of the rally from 0.9406. Otherwise, we'll stay bullish in USD/CAD.

In the longer term picture, there is no clear indication that the long term down trend from 2002 high of 1.6196 has reversed even though bullish convergence condition was seen in monthly MACD. The fall from 1.3063 to 0.9406 looks corrective and could either be part of a sideway pattern from 0.9056, or a corrective to rise from there. The long term outlook, i.e., the possibility of taking out 1.3063 high, will depend on whether rise from 0.9406 would eventually develop into a strong impulsive wave. We'll wait and see.

EUR/GBP Weekly Outlook

EUR/GBP was supported by at 0.8529 last week and rebounded strongly to 0.8734. But there is no change in the near term bearish outlook and Friday's sharp fall and break of 0.8620 minor support suggests that such rebound is already finished. Initial bias is back on the downside for a test on 0.8529 first. Break will confirm that recent decline from 0.9083 has resumed and should target 100% projection of 0.8884 to 0.8529 from 0.8795 at 0.8440 next. ON the upside, even in case of another recovery, break of 0.8734 is needed to be the first sign of near term reversal. Otherwise, we'll stay bearish in EUR/GBP and expect and eventual downside breakout.

In the bigger picture, price actions from 0.9799 (2008) should be unfolding as a consolidation pattern in the long term up trend. The first leg is completed with three waves down to 0.8067. Second leg should also be finished at 0.9083. Fall from 0.9083 is treated as the third leg and should target 0.8067 first and possibly further to 61.8% projection of 0.9799 to 0.8067 from 0.9083 at 0.8013 (which is closes to 0.8 psychological level). Nevertheless, we'd expect strong support from 0.7693/8186 support zone to contain downside to finish off the consolidation. On the upside, break of 0.8884 resistance is needed to invalidate this view or we'll stay bearish now.

In the long term picture, long term up trend from 2000 low of 0.5680 shouldn't be over yet and the choppy fall from 2008 high of 0.9799 should be a correction only. We'd expect such correction to be contained by 0.7963/0.8186 support zone and bring up trend resumption. Rise from 0.5680 is still expected to extend beyond 0.9799 high eventually.