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EUR/USD: entering consolidative mode ahead of NFP

EUR/USD Current price: 1.2378

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Mario Draghi came and went, expressing more than what he actually said and leaving a bitter taste in traders’ mouths. he ECB’s head left its economic policy unchanged with rates steady at 0.05%,  indicating that the ECB needs more time to assess the impact of latest measures and he delayed QE for early 2015. At the same time, he slashed growth and inflation expectations for this year, 2015 and 2016. Investors were by no means expecting QE but may have gotten ahead of themselves pushing the EUR/USD sub 1.23 before the news, and the speech triggered a sharp rally in the pair that advanced up to 1.2455. Later in the US afternoon and according to “officials familiar with the deliberations,” a news agency reported ECB’s Governing Council expects to consider a proposal for a broad-based asset program including sovereign debt next month, sending the pair down to 1.2359.

From a technical point of view, this intraday recovery seems quite irrelevant considering the pair trades below the 1.2400 figure and the weekly opening of 1.2462. Furthermore, the 1 hour chart shows price was unable to run above its 200 SMA, now trading also below 100 one, as indicators retrace from overbought territory still well above their midlines whilst 20 SMA aims higher around 1.2330 providing intraday support. In the 4 hours chart 20 SMA maintains its bearish slope above current levels while indicators corrected extreme overbought readings and lose upward potential below their midlines, which keeps the risk to the downside. US employment figures on Friday will be the make or break for the pair. If the data results are upbeat, then the pair may well end the week at fresh year lows

Support levels: 1.2360 1.2330 1.2270

Resistance levels: 1.2400 1.2445 1.2480

EUR/JPY Current price: 148.28

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The EUR/JPY cross surged to a fresh 2-week high of 148.95, a handful pips shy of the multiyear high posted last November at 149.13 as EUR strengthened while JPY remained subdued. However, trading well above its daily opening, the 1 hour chart of the pair shows indicators retracing from overbought territory, but price is well above 100 and 200 DMAs, with the latest having acted as intraday support in the 147.20 area. In the 4 hours chart moving averages maintain an upward slope well below current price, but indicators lack bullish strength, and are turning lower right above their midlines. In bigger time frames, RSI remains in overbought territory while momentum presents some bearish divergences that suggest the rally may fail to extend: Yen could see some temporal strength following disappointing US employment figures on Friday, but more steady gains seem unlikely for the Japanese currency considering latest BOJ decisions.

Support levels: 148.10 147 65 147.20

Resistance levels: 149.15 149.60 150.00

GBP/USD Current price: 1.5671

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Cable traded quite choppy this Thursday but within early week range, faltering once again on its attempts to regain the 1.5700 figure. Early with the European opening, the Bank of England released its monthly economic decision, leaving both rates and the APP program unchanged as policymakers gave more weight to the risks from low inflation and a weak global economic outlook than to the strong local recovery. On Friday, the BOE will release its Consumer Inflation Expectations, currently at 2.8%, and that could be a good barometer on what’s next for inflation in the UK, and the Pound. Technically, the short term picture remains neutral with the 1 hour chart showing price moving back and forth around a flat 20 SMA. Indicators are also stuck around their midlines, lacking directional strength. In the 4 hours chart the technical picture is mostly the same, with indicators around their midlines and 20 SMA flat a few pips above current price. The pair has been pretty much contained between 1.5585 and 1.5760 for most of the last 3 weeks, so it will take some follow through any of both to see some directional strength surging in the pair.

Support levels: 1.5650 1.5610 1.5580

Resistance levels: 1.5700 1.5740 1.5770

USD/JPY Current price: 119.82

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Trading intraday unchanged, the USD/JPY did not missed the opportunity of setting a fresh multiyear high at 120.24 right at the beginning of ECB’s President statement. Dollar retracement afterwards saw the pair dip down to 119.38, but the kneejerk was quickly cleared by buyers that now took a step aside and wait for Friday’s US Nonfarm payroll readings to decide what to do next with the pair. Technically, the short term picture in the 1 hour chart shows price well above 100 and 200 SMAs, both heading higher and well below current price with the distance between them widening, reflecting the ruling bullish trend, while indicators maintain a neutral stance flat around their midlines. In the 4 hours chart the consolidative range extends as the high and the low of the day were short lived and hardly affected technical readings, with momentum turning lower above 100 and RSI stuck around 70. Some follow through above the 120.00 level, moreover on positive US figures, should see the pair extending  its rally into the year end, opening doors for a test of next critical long term figure at 125.00.

Support levels: 119.60 119.25 118.90

Resistance levels: 120.00 120.40 120.75

AUD/USD Current price: 0.8382

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Commodities saw limited activity on Thursday, and so did the currencies correlated with them as is the case with the Aussie. The AUD/USD pair reached a fresh 4-year low of 0.8355, despite the Australian trade balance that surprised to the upside, posting a deficit of 1,323M for October against the previous month’s one of 2,235M. Dollar intraday weakness was just enough to push the pair briefly up to 0.8420, but the pair closes in red for third day in a row this week, in line with the dominant bearish trend. Short term, the 1 hour chart shows price right below a mild bearish 20 SMA as indicators turn lower and cross their midlines to the downside, while in the 4 hours chart 20 SMA maintains a strong bearish slope, providing intraday resistance around 0.8400 whilst indicators barely bounced from oversold territory.  A break through mentioned daily low may see the pair extending its decline to fresh lows below the 0.8300 figures in the last day of the month, while recoveries up to 0.8485 will hardly affect the trend and more likely be seen as selling opportunities.

Support levels:  0.8355 0.8320 0.8290

Resistance levels: 0.8400 0.8440 0.8485

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