The British pound sterling, meanwhile, has clearly diverged from its European counterpart. After inching lower overnight, the GBP/USD has rallied this morning, regaining the round 1.5800 handle. From a longer-term perspective, the pair remains within the same 150 pip range that has contained rates throughout all of February. To the downside, support is expected near 1.5730 whereas resistance looms at 1.5885.

Out of all the major currency pairs, the USD/JPY has exhibited one of the clearest trends this week. As the 4hr chart below shows, rates have rallied a smooth 125 pips thus far this week, and the recent break above the monthly pivot at 77.60 opens the door for a continuation up to the round 78.00 handle or previous resistance at 78.25 by the weekend or early next week. We will continue to look for buying opportunities over the course of the day – stay tuned to FX360 and our daily Live Market Analysis webinars for any intraday updates.

The USD/CHF has pulled back to a significant support level, reflecting the broad strength in the European currencies against the U.S. Dollar. Rates are currently consolidating just above .9115, where 3 previous lows have come in; a break below this key support level would open the door for further drops down toward the Monthly S1 Pivot at .9029 and the .9000 round handle. However, as discussed in our most recent weekly technical preview report, this pair has lately been trading as the inverse of the EUR/USD, so Swissie traders should check for key support and resistance levels in the Euro before placing any trades.

The U.S. Dollar has also rallied against its Northern Neighbor over the past 24 hours. The USD/CAD broke out of the descending channel that had pushed rates lower for the past 3 weeks and quickly surged above parity (1.00). Unfortunately, this morning’s rally has pushed the pair into the adjusted stop loss on our short trade, resulting in a small, 15 pip loss on the trade. Note, however, that this loss was a fraction of the initial risk of 88 pips. Moving forward, the USD/CAD may continue to rally into the close of the week with minor resistance expected at 1.0036 and major previous-support-turned-resistance at 1.0070.

The Australian Dollar was not spared from the broad U.S. Dollar based strength. Rates have conclusively dropped below accelerated bullish trend line support, a level that had guided rates higher on five occasions in the past 3 weeks. The strong reversal has led to our open long trade from Wednesday stopping out as the selloff was exacerbated by signs of a slowdown in China, Austalia’s largest trading partner. The break of significant support levels (strong bullish trend line, previous support at 1.0680) suggests the potential for a more substantial pullback ahead of the weekend, with support anticipated at the round 1.0600 handle.

The Kiwi also sold off against the U.S. Dollar in “risk off” trade. As of writing, the pair is approaching a significant previous-resistance-turned-support level at .8240. If the bearish momentum leads to a break of this floor, rates may quickly target the round .8200 handle in short order, whereas the bulls will try to defend this area and staunch the bleeding. Stay tuned to FX360 and our daily Live Market Analysis webinars for any intraday updates.