Forex Analysis
Valeria Bednarik -

Valeria Bednarik -

Chief Analysis and has become an active trader since 2003


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EUR/USD: pressuring post-ECB highs

EUR/USD Current price: 1.2442

View Live Chart for the EUR/USD

The dollar took another dive on Wednesday, extending its drop ahead of the year-end, as the American’s currency rally has largely extended in the second half of this 2014. There was little fundamental data behind market movements, but was another day of dropping stocks what sent the USD down, as arising political turmoil in Greece spurred demand for safety, favoring the Japanese yen the most. Greece’s stock market crashed and bond yields soared after the country’s government announced surprised presidential vote.

The EUR/USD pair trades at its highest of the day above the 1.2400 level, accelerating higher by the US close. The 1 hour chart shows price hovering around post-ECB high, whist indicators aim  slightly higher above their midlines, and price advances above moving averages, supporting further advances. In the 4 hours chart, the technical picture is also bullish, with indicators biased higher near overbought levels and 20 SMA slowly gaining bullish slope currently around 1.2340. If the price manages to extend and hold above the 1.2450 price zone, the pair will likely continue advancing over the upcoming sessions, eyeing then 1.2520/30 strong static resistance zone.

Support levels: 1.2400 1.2370 1.2340

Resistance levels: 1.2450 1.2490 1.2525

EUR/JPY Current price: 147.13

View Live Chart for the EUR/JPY
The EUR/JPY cross approaches slowly but steady to the low set on Tuesday at 146.79, as the yen strengthened the most in this risk-aversion environment. The pair has attempted to regain some ground last Asian session, advancing up to 148.23, but failed to hold. The 1 hour chart shows price holding barely above the 147.00 level and developing well below its 100 and 200 DMAs, with the shortest gaining bearish slope above the largest. Indicators in the mentioned time frame stand below their midlines albeit showing no clear directional strength. In the 4 hours chart momentum looks slightly exhausted to the downside and attempts to bounce, albeit RSI maintains a strong bearish slope that favors further declines. The key support remains at 146.80, with a break below probably triggering a continued sell-off towards the mid 145.00.

Support levels: 146.80 146.30 145.80

Resistance levels: 147.50 148.20 148.80

GBP/USD Current price: 1.5702

View Live Chart for the GBP/USD
The GBP/USD pair broke above the daily descendant trend line coming from 1.6182, albeit through lateralization, which diminish the validity of the break. The pair has been quite reluctant to advance above the 1.5700 figure despite the UK Goods Balance showed its lowest deficit in seven months.  Closing higher on the day anyway, the 1 hour chart shows the price is developing above a bullish 20 SMA that provides short term support around 1.5680, while indicators are turning lower above their midlines, lacking clear directional strength. In the 4 hours chart indicators are also turning south above their midlines, while 20 SMA stands around 1.5640. Selling interest has been even stronger on approaches to the 1.5740 level, so it will take some steady advance above it, to see the pair gaining upward momentum, and extending then up to 1.5825, November 27th daily high and the line in the sand for the ruling bearish tone.

Support levels: 1.5680 1.5650 1.5615

Resistance levels: 1.5740 1.5785 1.5825.

USD/JPY Current price: 118.23

View Live Chart for the USD/JPY
The Japanese yen advances against its American rival, holding for now above the 118.00 mark, but overall bearish. The market seems to have forgotten about upcoming elections on Sunday, and all yen movements are purely risk-driven. On Sunday, Abenomics will be under scrutiny as PM Shinzo Abe dissolved the Parliament and called for elections seeking for a fresh mandate for its policies. The Yen can came under renewed pressure if Abe’s party wins, as it will mean his easing policy will continue at least for two more years. But in the meantime, the USD/JPY presents a strong bearish tone at least in the short term, as the 1 hour chart shows price extending below its 100 and 200 SMAs, whilst indicators continue to head lower well into the red. In the 4 hours chart indicators are also biased strongly south below their midlines, supporting the shorter term view. The critical support to follow comes at 117.90, this week low, with investors speculating on a possible test of 116.00 if the mentioned support gives up.

Support levels: 117.90 117.45 117.00

Resistance levels:  118.70 119.30 119.80

AUD/USD Current price: 0.8293

View Live Chart of the AUD/USD
There were no changes in the AUD/USD pair that remains stuck in the 0.8300 price zone. The pair has reached a lower high but also a higher low daily basis, closing the journey with a doji for the second day in a row. On Wednesday, the Australian Prudential Regulation Authority has decided to put a halt on investment property loans, and that is expected to pave the way for the RBA to cut interest rates, the main reason why Aussie is incapable of running. The 1 hour chart of the pair shows momentum heading strongly lower below 100 as 20 SMA caps the upside a few pips above the current price. In the 4 hours chart price hovers around a bearish 20 SMA still, while indicators had erased oversold readings from last Monday, standing now directionless around their midlines. Risk remains to the downside, with the 0.8260 area offering strong support and being the level to break to confirm further slides for the upcoming session.

Support levels:  0.8285 0.8255 0.8220

Resistance levels: 0.8330 0.8380 0.8415

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