Forex Analysis
Valeria Bednarik -

Valeria Bednarik -

Chief Analysis and has become an active trader since 2003


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EUR/USD: set to range until FOMC

EUR/USD Current price: 1.2432

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On Monday, markets were once again led by declining oil prices, with the commodity setting the tone for the rest of the financial assets across the world. An early decline in the commodity was diluted with European markets opening, as local equities traded in the green for most of the session, dragging the dollar down across the board. With the American opening however, better than expected US Industrial Production readings gave the greenback a lift against most rivals that lasted until the barrel fell down to $55.87 a barrel, fresh multi-year low. Stocks closed in red, and dollar gave back some ground, holding however its gains particularly against the commodity currencies and the Pound.

The EUR/USD pair traded as low as 1.2414 on the day, surging to a daily high of 1.2478 with oil slides. Nevertheless, selling interest around the 1.2480/90 area continues to cap rallies, pushing the price back below the 1.2450 mark. In the 1 hour chart, indicators had turned lower around their midlines, lacking clear directional momentum at the time being, while the price has found short term intraday support around an ascendant 100 SMA. In the 4 hours chart the price has been unable to move far away from a bullish 20 SMA, whilst indicators also stand directionless in neutral territory. Market players are waiting for the upcoming FOMC meeting on Wednesday to make up their minds and decide whether is worthy to resume dollar buying, or if the time of taking profits out of the table has finally arrived. In the meantime, the price will likely remain contained between 1.2360 and 1.2490 .

Support levels: 1.2410 1.2360 1.2340

Resistance levels: 1.2450 1.2490 1.2525

EUR/JPY Current price: 146.53

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Despite Abe’s party victory, the Japanese Yen stands as the stronger currency of the board this Monday, with the EUR/JPY pair having been unable to recover beyond 148.00 earlier on the day. Investors run to buy the JPY every time stocks decline and there has been no exception in this first day of the week, with the EUR/JPY losing over 150 pips and extending a few pips below last week low, reaching 146.39. The 1 hour chart shows price has been limited to the upside by its 200 SMA around the mentioned 148.00 figure, whilst price accelerated south once below the 100 SMA. Indicators in the mentioned time frame remain near oversold territory, supporting further declines ahead. In the 4 hours chart indicators present a mild bearish tone around their midlines, lacking momentum but also favoring the downside, with a break below 145.90 anticipating a stronger decline ahead.

Support levels: 146.30 145.90 145.50

Resistance levels: 146.80 147.45 148.05

GBP/USD Current price: 1.5642

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The GBP/USD pair flirted with the 1.5600 level mid American session, pressured since early on the day. There were no fundamental data to affect specifically Pound, and the movements in the pair had been purely technical. Failure to advance beyond the 1.5750/70 area has discouraged buyers, and the price slowly eased until it triggered stops below 1.5700, accelerating there its decline. The 1 hour chart shows a clear bearish momentum coming from technical readings ahead of Asian opening, as latest bounce was unable to regain the 1.5700 figure. In the 4 hours chart, the technical picture also favors the downside, as price extends below its 20 SMA and indicators turned finally lower entering negative territory. On Tuesday, the UK will release several first line readings, which means upcoming moves will be linked to them. Nevertheless, the downside is favored with a break below 1.5610 favoring a retest of past week low at 1.5540.

Support levels: 1.5610 1.5570 1.5540

Resistance levels: 1.5650 1.5680 1.5720

USD/JPY Current price: 117.77

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The USD/JPY pair surged up to 119.05 early Asian opening, following Abe’s adjusted victory in Japan. The ruling PM party has won 326 seats in Sunday’s poll to maintain a two-thirds “super-majority” in the lower house of the parliament. But the Abenomics are still in doubt after the limited victory, and falling stocks did not helped, sending the pair to a fresh 2-day low where it stands. Technically, the 1 hour chart shows the price was capped by a bearish 100 SMA that accelerates south widening the distance with the 200 SMA around 119.50, as indicators head strongly south below their midlines, supporting a downward continuation. In the 4 hours chart technical readings also support the downside, with the immediate support now at 117.43, last week low. A break below this level should anticipate a move towards the 117.00 figure in the short term, while if this last gives up, there’s little in the way down to 116.60 price zone.

Support levels: 117.45 117.00 116.60

Resistance levels: 118.10 118.50 118.90

AUD/USD Current price: 0.8216

View Live Chart of the AUD/USD
The AUD/USD pair reached a fresh 4-year low of 0.8200 before bouncing some, quite limited to the upside still. The pair has been in a bear market for most of the second part of this 2014 but latest decline came with RBA Governor Stevens’ desire of seeing the pair closer to 0.7500 according to his own words. During the upcoming Asian session, the Central Bank will release the Minutes of its latest meeting which guarantees intraday volatility for at least a couple hours. Technically, the bearish trend seems firm in place, as the 1 hour chart shows intraday bounces reaching lower highs, while the price remains limited below a bearish 20 SMA and indicators are biased lower in negative territory. In the 4 hours chart 20 SMA also contains the upside, currently around 0.8260, while indicators stand directionless below their midlines. A downward acceleration below 0.8190 should be the first sign of further declines, eyeing a probable approach to the 0.8100 figure if the movement extends.

Support levels: 0.8190 0.8145 0.8110

Resistance levels: 0.8225 0.8260 0.8300

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