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GBPUSD: The pair saw price weakness on Friday and now looks to follow through lower in the days ahead. Support lies at the 1.4050 level where a break will turn attention to the 1.4000 level. Further down, support lies at the 1.3950 level. Below here will set the stage for more weakness towards the 1.3900 level. Conversely, resistance stands at the 1.4150 levels with a turn above here allowing more strength to build up towards the 1.4200 level. Further out, resistance resides at the 1.4250 level followed by the 1.4300 level. On the whole, GBPUSD looks to correct lower.

The British pound is trying to build upside momentum against the greenback, after earlier finding technical support just below the key 1.4000 level. The GBPUSD pair currently trades around the 1.4020 level, with the U.S dollar index starting to give back intraday gains amidst depressed market volumes. Sterling traders are awaiting a key note speech from Bank of England Governor Mark Carney later this evening, ahead of the BOE's Inflation Report on Tuesday.

The GBPUSD pair is likely to see continued upside whilst trading above the 1.4000 level, key intraday resistance is now found at the 1.4036 and 1.4074 region.

Should the GBPUSD start to move below the 1.4000 support level, we may see a deeper correction back towards the 1.3938 and 1.43901 support levels.

The euro has moved back towards the key 1.2430 level against the U.S dollar, after earlier finding strong intraday technical support from its 100-day moving average on the four-hour time frame. The EURUSD pair continues to trade in a contained price-range between the 1.2390 to 1.2430 levels, with no clear intraday directional bias in early week trading. Moving into the U.S session, trading volumes remain light with the Eurogroup meeting underway in Brussels and U.S markets away for President's Day.

The EURUSD price-action will likely extend higher once the 1.2430 level is clearly breached, key intraday resistance is found at the 1.2490 and 1.2554 levels.

A sustained move below the 1.2390 level should lead the EURUSD pair to decline towards the 1.2367 and 1.2292 support regions.

The DAX index has started the week in subdued form. In the Monday session, the index is trading at 12,464.00 up 0.10% since the Friday close. On the release front, the eurozone current account surplus narrowed to EUR 29.9 billion, short of the estimate of EUR 30.5 billion. US markets are closed for Presidents' Day. On Tuesday, Germany releases ZEW Economic Sentiment and the eurozone will publish releases Consumer Confidence.

The recent correction in global stock markets has sent the DAX lower, with the index losing 5.9% in February. However, the index rebounded last week, posting a winning week for the first time since mid-January. Strong corporate earnings in Europe last week boosted European stock markets. The US recently passed massive corporate and individual tax reform, worth $1.5 trillion. This could significantly boost earnings in the first quarter of 2018 for European companies which have major operations in the US, such as banking giant Deutsche Bank.

The recent turbulence in the global stock markets has triggered strong volatility in the currency markets, and ECB President Mario Draghi recently stated that the ECB was concerned about the euro's sharp fluctuations. Last week, Draghi weighed in on Bitcoin, a cryptocurrency which has seen wild fluctuations in recent months. There are growing calls for regulation of these currencies, and central banks could play a key role in such regulation. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB's responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions.

EUR/USD

Current level - 1.2406

The sharp reversal at 1.2555 signals a completion of the whole rise from 1.2210 and the bias is bearish, as a break through 1.2390 support will challenge 1.2290 area. Initial resistance lies at 1.2450.

USD/JPY

Current level - 106.60

The reversal at 105.50 signals a completion of the slide since 109.70, but the pair is still struggling below 106.80 interim resistance. My outlook here is neutral.

GBP/USD

Current level - 1.4004

The recent reversal at 1.4150 signals a negative intraday bias, for a slide towards 1.3920 area. Initial minor resistance lies at 1.4080.

U.S. markets are closed today for Presidents' Day so European markets are struggling for direction. With lighter trading volumes anticipated there are likely to be few trading triggers today. There are no high impacting economic data releases due, however traders will look cautiously at a speech by Bank of England (BOE) Governor Mark Carney about leadership and values especially given his hawkish tone at the BoE meeting last week.

FTSE 100

In the daily timeframe, FTSE 100 has recovered from the lows of the sharp declines and is now testing the important 7300 zone. A break of the trend line from March above 7330 would put the bulls in control with initial resistance at 7355 and then the 61.8% retracement at 7460. However, if the trend line is confirmed as resistance then any downside move will find support at 7275, 7205 and then 7170.

DAX

German stocks were modestly higher on Monday as oil prices advanced and the EURUSD held steady above 1.24. The rally in the DAX index has stalled at 12550 and represents a retracement of less than 50% of the decline from the highs. A break of 12550 is needed for a continued bullish move with resistance at 12665 and 12742 before reaching the 61.8% retracement at 12870. Major trend line and horizontal resistance will be found near 13000. On the flip-side further declines would find support at 12200 and 12050.

The euro has paused on Monday, after strong losses on Friday. Currently, the pair is trading at 1.2420, up 0.08% on the day. On the release front, the eurozone current account surplus narrowed to EUR 29.9 billion, short of the estimate of EUR 30.5 billion. There are no US indicators, as US markets are closed for Presidents' Day. On Tuesday, Germany releases ZEW Economic Sentiment and the eurozone will publish releases Consumer Confidence.

The euro lost close to 1% on Friday, as the US posted sharp housing and consumer confidence reports. Building Permits jumped to 1.40 million in January, up from 1.30 million in December. This easily beat the estimate of 1.29 million. Housing Starts followed suit and improved to 1.33 million in January, up from 1.19 million a month earlier. This was well above the forecast of 1.28 million. There was more positive news from consumer confidence, as UoM Consumer Confidence climbed to 99.9, well above the estimate of 95.4 points. This marked a 4-month high.

The recent volatility in the currency markets has not gone unnoticed by Mario Draghi & Co. Last week, the ECB head expressed confidence that eurozone inflation is moving closer to the Bank's target of just below 2 percent, due to improving economic growth. However, Draghi listed currency market volatility as an obstacle to the inflation target, and added that the ECB would carefully monitor the euro's exchange rates. The ECB tapered its massive stimulus program from EUR 60 billion to 30 billion/mth in January, and the markets are on the lookout for hints as to whether the ECB will normalize policy and wind up stimulus in September. Any hints from ECB policymakers about a change in policy could have a strong impact on the movement of the euro.

The strong bullish momentum that prevailed in the market last week allowed the Euro to hit a new 2015/2018 high of 1.2550 against the US Dollar early on Friday. This sentiment did allay during the following hours, thus leaving the rate at the psychological 1.24 mark on Monday morning.

It is expected that this latest wave down was just a minor correction against the overall up-trend, as bulls were gaining strength for further appreciation within the following trading hours.

Meanwhile, this session should be relatively calm for the pair, as no significant fundamentals are to be released. Thus, the Euro is likely to fluctuate within the bounds of the 55– and 200-hour SMAs in the 1.2472/1.2350 territory. Supported by the weekly PP and the 100-hour SMA at 1.24, the pair could be tended slightly north.

Following a test of 1.4150 on Friday morning, downside risks took over the market and pushed the rate 0.92% lower during the following hours. As a result, the pair was testing the weekly PP and the 100-hour SMA circa 1.40 early today.

It is likely that this psychological level provides an unbreakable support, thus allowing for further gains in this session. The rate could demonstrate low volatility, especially if no fundamentals are scheduled until the evening. Thus, the Pound could fluctuate between the 55– and 100-hour moving averages for a brief period of time before breaching the former and approaching the weekly R1 at 1.4204.

Meanwhile, the lowest point today should be the 200-hour SMA and the 38.20% Fibo retracement at 1.3950.

The US Dollar managed to regain some lost positions against the Japanese Yen on Friday, thus reversing its period of decline apparent since February 2. By Monday morning, the Greenback had surpassed the 55-hour SMA and was moving towards the weekly PP, the monthly S1 and the 100-hour SMA circa 107.00.

Technical indicators on the daily time-frame suggest that the pair could edge higher this week, as bulls might want to use this opportunity to push the rate away from its 2017/2018 low of 105.70 reached early on Friday.

Strong gains, however, could be limited in this session due to the strong resistance at 107.00. The ultimate daily high should be the 200-hour SMA at 108.00 and the low—the 105.00 mark.