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EUR/USD Breaks Down, Oil Tests Key Support as Risk-Off Hints Appear

EUR/USD Breaks Down, Oil Tests Key Support as Risk-Off Hints Appear

2020-01-23 20:00:00
James Stanley, Currency Strategist
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Price Action Setups Webinar

EUR/USD Fresh 2020 Lows

Probably the most notable event from this morning has been a breakdown in the Euro. This morning brought an ECB rate decision into the mix; and Christine Lagarde didn’t really say anything either hawkish or dovish (she does identify as an owl, after all), but the single currency was able to push down to a fresh 2020 low after holding at a key area of support over the past couple of trading days.

Bearish continuation approaches could be complicated by a big batch of support sitting underneath current price action, running around the 1.1000 psychological level that had come into play to help hold the lows in December of last year.

EUR/USD Daily Price Chart

eurusd daily price chart

Chart prepared by James Stanley; EURUSD on Tradingview

EUR/JPY Threatens Wedge Support

As looked at in the Euro forecast for this week, EUR/JPY may have offered a more amenable backdrop for Euro bears, as resistance had just started to show off of a bearish trendline projection. That resistance has held and sellers have made their way back this week, driven by a bit of risk aversion that appears to be emanating from the Coronavirus scenario.

EUR/JPY Daily Price Chart

eurjpy daily price chart

Chart prepared by James Stanley; EURJPY on Tradingview

WTI Crude Oil Support Test

The first chart looked at in today’s webinar was for WTI Crude Oil, which has seen a very visible downside move develop this week. While price action started the week with a quick resistance check up to a Fibonacci level at 59.64, sellers have remained in-control ever since, driving prices all the way down to the 55-handle. At this point, reversal potential could possibly be attractive; chasing the move-lower could be of difficulty.

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Crude Oil Crushed to Key Support

crude oil price chart

Chart prepared by James Stanley; Crude Oil on Tradingview

US Dollar In Resistance Zone as Risk-Off Potential Shows

Going along with that Yen-strength, the US Dollar has been bid so far today, helping DXY to test a key area on the chart that runs from 97.70-97.86. This is the same zone that helped to catch the highs in late-December, and prices have quickly reverted back to this zone. This can potentially open the door for reversal scenarios, which may be seen as attractive in pairs like GBP/USD or perhaps even USD/CAD. For bullish USD-continuation scenarios, AUD/USD can remain as attractive.

US Dollar Four-Hour Price Chart

us dollar four hour price chart

Chart prepared by James Stanley; US Dollar on Tradingview

GBP/USD: Slides Below Fibonacci Support, What’s Next?

I had looked at this one on Twitter a couple of times over the past two days, noting a support test at a prior Fibonacci level and, this morning, a series of lower-highs that’s developed since. This brought potential for a deeper pullback, which has started to show, and the next natural question is whether higher-low support may soon develop. There are two nearby zones of note, the nearest of which runs from 1.3075-1.3084, and a bit deeper is a prior zone of support around the 1.3037 level.

GBP/USD Hourly Price Chart

gbpusd hourly price chart

Chart prepared by James Stanley; GBPUSD on Tradingview

USD/CAD Clawing Back Breakout Gains

Yesterday brought a couple of Canadian drivers into the mix with the early-morning CPI release followed by a Bank of Canada rate decision. The net impact was a sell-off in the Loonie as USD/CAD pushed up to fresh highs, breaking above a key resistance point around 1.3100 in the process. As of this morning, the pair was attempting to hold higher-low support; but sellers have continued to push and prices have scaled-back.

This opens the door to a couple of possible scenarios: For longer-term approaches, short-side swings, looking for reversals could remain a possible approach. On a shorter-term basis, looking for support at that prior area of resistance around 1.3100 could keep the door open for topside trend strategies.

USD/CAD MIXED
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -22% -18% -19%
Weekly 4% -35% -28%
Current Retail Sentiment in USD/CAD
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USD/CAD Four-Hour Price Chart

usdcad four hour price chart

Chart prepared by James Stanley; USDCAD on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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