Here is the market outlook for this week:
EURUSD
Dominant bias: Bullish
This pair went flat from Monday to Wednesday – unable to stay above the resistance line at 1.0750. Price then declined a little in the context of an uptrend. The market has been gradually moving up since the beginning of the year, which has led to a bullish bias, but that should be challenged in February. The downtrend may even start this week, as the Euro is now expected to weaken (except against JPY).
USDCHF
Dominant bias: Bearish
Price went sideways last week – slightly below the resistance level at 1.0000. There may be temporarily moves above that resistance level, but the likelihood is a continuation south. Apart from the sideways movement last week, price has been ticking down since the beginning of this year – hence the bearish bias that should continue in February due to expected strength in CHF. Drops in EURUSD may bring some transitory rallies, but the overall trend for February should be down.
GBPUSD
Dominant bias: Bullish
The 280 pip rally last week topped at the distribution territory of 1.2650 before the shallow retracement that started on Thursday. Since the low of January 16, price has climbed some 650 pips, but the resulting bullish bias may soon end due to a bearish outlook on several GBP pairs for February. Price may test the distribution territories at 1.2700, 1.2750 and even 1.2800, but might not be able to go that far as the possibility of serious bearish moves in February is very high.
USDJPY
Dominant bias: Bearish
The continued decline since early January has resulted in a Bearish Confirmation Pattern, but Thursday saw price begin to rise, and the market closed above the demand level at 115.00 on Friday. Additional buying may now push price towards the supply levels at 116.00, 116.50 and 117.00 – possibly invalidating the recent bearish bias. Overall, the outlook for February is bullish.
EURJPY
Dominant bias: Bullish
This pair is bullish in the short term but neutral in the medium term as the move north last week created a short-term bullish signal. The only factor likely to help maintain this outlook in February is expected weakness in the Yen (which will also impact other JPY pairs). February is likely to see an overall gain of at least 500 pips, but there will be various degrees of pullback along the way.