Forex Analysis
Valeria Bednarik -

Valeria Bednarik -

Chief Analysis and has become an active trader since 2003


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EUR/USD: beginning of a counter-trend move?

EUR/USD Current price: 1.2537

View Live Chart for the EUR/USD


It was a good day from the fundamental point of view all across the world: unexpectedly, the German ZEW survey show investors’ confidence rose for the first time in 11 months, another sign of a tepid economic recovery in the largest economy of the EZ, helping the EUR/USD recover above the 1.2500 figure. Later on the day, US PPI also came out better than expected, increasing in October as higher cost for services and food outweighed the slump in energy prices. Dollar strength that ruled markets for most of the last quarter may be finally due to a well deserved correction, and the EUR/USD upward corrective movement could extend particularly if the weekly high is overcome, yet a reversal in greenback’s momentum is yet to be confirmed.

Short term, the 1 hour chart for the pair shows price pressuring its daily high at 1.2545 by the end of US session, with price advancing above moving averages and indicators losing upward strength but steady above their midlines. In the 4 hours chart the pair presents a mild positive, as despite above 20 SMA, largest moving averages remain above current price and with a clear bearish slope. The 50% retracement of the latest bearish run from 1.2770 to the year low of 1.2357 stands at 1.2570, suggesting an outbreak above the area should lead to a steadier recovery towards 1.2660 strong static resistance level.

Support levels:  1.2515 1.2480 1.2440

Resistance levels: 1.2570 1.2620 1.2660

EUR/JPY Current price: 146.39

View Live Chart for the EUR/JPY
Yen sunk against its rivals this Tuesday, supported by a series of factors: first, Japanese PM Shinzo Abe finally announced what it was rumored last week: he will delay the second increase in the sales tax hike by 18 months and will dissolve the lower house of the Parliament, to get a fresh mandate for his economic policies. Alongside with its Japan developments US indexes achieved fresh record highs driving the rising sun currency to fresh multiyear lows: the EUR/JPY reached 146.69 before a minor pullback attracted buyers and sent the pair back near such high. Technically, the 1 hour chart for the pair shows indicators giving some signs of exhaustion near overbought territory, while 100 and 200 SMAs head higher well below current price and the distance between each other widens, a clear reflection of the dominant trend. In the 4 hours chart RSI stands above 70 and momentum in positive territory, albeit showing no directional strength at the time being. Overall, the upside is favored even with dips down to the 144.40/80 area. Immediate resistance stands at 146.90, where the pair presents some daily highs and lows back from October 2008, so it will take an upward acceleration above it to confirm a steadier advance for today.

Support levels: 146.30 145.85 145.30

Resistance levels: 146.90 147.25 147.70

GBP/USD Current price: 1.5639

View Live Chart for the GBP/USD
Pound showed no signs of life during the last 24 hours, spending the day confined in a 50 pips range against its American rival. In the UK, inflation readings met expectations, with the YoY reading at 1.3% picking up from previous 1.2%, albeit the core reading remained steady at 1.5% against the expected 1.6%. Ever since the BOE suggested inflation will remain subdued and there will be no rate hikes in 2015, the Pound lost its charm. Short term, the 1 hour chart for the GBP/USD shows price consolidating near its recent lows, with indicators turning slightly lower around their midlines and price below a flat 20 SMA, lacking directional strength. In the 4 hours chart  indicators extended their correction from oversold levels yet stalled below their midlines, whilst 20 SMA maintains a strong bearish slope offering intraday resistance in the 1.5660/70 price zone. The fact that price did not followed indicator’s upward correction suggests risk remains to the downside, with a break below 1.5620 required to confirm a downward continuation towards 1.5550 in the short term.

Support levels: 1.5620 1.5585 1.5550

Resistance levels: 1.5670 1.5700 1.5740

USD/JPY Current price: 116.74

View Live Chart for the USD/JPY
The BOJ will finish its 2-day monthly economic meeting today, yet seems they have made enough announcements lately, to be able to shock markets again today. Nevertheless, cautious is highly recommended when coming to trade yen crosses over the upcoming hours. At this point, the USD/JPY pair has failed to post a higher high for the year, but holds near the 117.00 figure. Having traded in the higher half of Monday’s range, the short term picture shows a mild positive tone, with indicators above their midlines yet lacking strength, while 100 and 200 SMAs head strongly up well below current price. In the 4 hours chart momentum hovers in neutral territory, and RSI stands around 61 but also showing no clear strength. Some follow through above 117.45 should see the pair pick up momentum, with dips still seen as buying opportunities, short term down to 115.50 price zone.

Support levels: 116.60 116.25 115.90

Resistance levels: 117.05 117.45 117.85

AUD/USD Current price: 0.8729

View Live Chart of the AUD/USD
Australian dollar was affected by RBA Governor Glenn Stevens that said the local economy has spare capacity and contained inflation that justify loose monetary policy, pointing out the economy needs low rates for some time yet: the AUD/USD saw a kneejerk down to 0.8681 intraday, albeit USD weakness across the board favored a recovery above the 0.8700 level. Short term, the 1 hour chart presents a neutral technical stance with price a couple pips above its 20 SMA and indicators for the most horizontal right above their midlines. In the 4 hours chart  the technical picture is quite alike, with price moving back and forth around an horizontal 20 SMA and indicators turning lower around their midlines. The pair may be developing the second shoulder of a H&S figure, suggesting some short term upward continuation towards 0.8770 area, albeit price needs to be rejected from it and break below the 0.8640 strong static support to confirm it. It could be a little early to consider, but worth following price action over the upcoming days. Some further advances above mentioned 0.8770 however, should see a strong upward acceleration, denying the figure and supporting further advances in the midterm.

Support levels: 0.8690 0.8650 0.8610

Resistance levels: 0.8740 0.8775 0.8820

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