Technical Analysis for Major Currencies
EURO
The Euro versus Dollar pair continued to incline to reach levels above 1.3700 before reversing back to the key support at 1.3585. We still hold our outlook to the upside with targets at 1.3815 ahead of the critical 1.3855 level which may determine the medium term trend where a breach of this level will take the pair to as far as 1.4200. This short term incline remains as far as 1.3440 is intact.
The trading range for today is among the key support at 1.3440 and the key resistance at 1.4050
The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120
Support: 1.3630, 1.3585, 1.3560, 1.3500, 1.3440
Resistance: 1.3710, 1.3735, 1.3775, 1.3810, 1.3855
Recommendation: According to our analysis, buy the pair above 1.3630 with targets at 1.3735 and stop loss with four hour closing below 1.3560
GBP
After successfully breaching the resistance levels yesterday, the Cable was able to build a solid base on the intraday and short term trend to gradually incline as it targets 1.6000. However, the pair must breach the 1.5485 level and maintain levels above 1.5190 to continue the upside trend yet we may witness a slight downside correction towards 1.5155 in an attempt to breach it and head towards 1.4850.
The trading range for today is among the key support at 1.4860 and the key resistance at 1.5525
The general trend is to the upside as far as 1.4850 remains intact with targets at 1.6600
Support: 1.5235, 1.5190, 1.5155, 1.5070, 1.5030
Resistance: 1.5300, 1.5345, 1.5380, 1.5480, 1.5505
Recommendation: According to our analysis buy the pair above 1.5235 with targets at 1.5345 and stop loss with a four hour closing below 1.5155
JPY
The USD/JPY pair was able to reach the technical targets for the bearish pattern in an attempt to breach the key support at 96.30 yet it rebounded back to the upside to maintain trading above this level. The bullish harmonic pattern seen has been completed yet we are currently waiting for a close above 96.30 to confirm the intraday trend to the upside targeting 97.65 – 98.10 after gathering bullish momentum. This incline remains as far as 95.75 is intact.
The trading range for today is among the key support at 94.45 and the key resistance at 101.40
The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60
Support: 96.30, 95.75, 95.20, 94.85, 94.45
Resistance: 97.20, 97.65, 98.10, 98.85, 99.05
Recommendation: According to our analysis, buy the pair above 96.30 with targets at 97.65 and 98.10 and stop loss with four hour closing below 95.75
CHF
The Dollar versus Swissy was able to touch the 1.0980 level, which was yesterday's target; before rebounding back to the upside in an attempt to trade within a minor downside channel as seen in the above image. Our outlook remains to the downside to breach the 1.0980 level before reaching 1.0745 as an initial target before heading towards 1.0570 on the short term. This decline remains as far as 1.1300 is intact.
The trading range for today is among the key support at 1.0745 and the key resistance at 1.1400
The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245
Support: 1.0980, 1.0920, 1.0855, 1.0795, 1.0745
Resistance: 1.1075, 1.1110, 1.1165, 1.1220, 1.1265
Recommendation: According to our analysis, sell the pair below 1.0980 with targets at 1.0860 and stop loss with four hour closing above 1.1075
CAD
For the second consecutive day, the 1.1670 level was able to halt further inclines for the Dollar versus Loonie pair to reach the key resistance for the downside channel at 1.2110 and therefore the pair is to decline to levels below 1.1565 where a four hour closing below this level will open the way for the pair towards 1.1456 (key support for the descending channel) and then off to 1.1300. The short term downside trend remains as far as 1.1670 is intact where a breach of this level will reverse movements towards 1.1760 and 1.2110 respectively.
The trading range for today is among the key support at 1.1335 and the key resistance at 1.1975
The general trend is to the upside as far as 1.1335 remains intact with targets at 1.3000
Support: 1.1565, 1.1530, 1.1465, 1.1410, 1.1370
Resistance: 1.1610, 1.1670, 1.1730, 1.1815, 1.1875
Recommendation: According to our analysis, sell the pair below 1.1565 with targets at 1.1465 and stop loss with four hour closnig above 1.1670
Fundamental Analysis
Many USD pairs like the EUR/USD, GBP/USD, NZD/USD and some others are approaching some former high fibbonacci resistance on the daily chart. While the picture continues to highlight some nice bullish momentum, with many USD pairs overextended into resistance, it looks like a good setup for a short to medium term short. Watch the video for more details there. After pushing through 919, gold is looking potentially short term bullish, but the potential for a medium to long term significant decline is still quite palpable, so I'd play it with either a short term buy looking for the 935-950 range to take profits, or wait for a potential rally to that region to get short for a longer position/swing trade. Stocks are starting to exhibit signs of waning momentum and this time sentiment is really starting to flip a bit negative along with it. I think a 100 point or so pullback is inevitable on the S&P and with lower highs and lower lows on the hourly chart, I think it may be brewing even now.
Tuesday saw the UK Claimant Count Change released "accidentally" early in the NY session and came out much better than expected, although that did not benefit the GBP greatly. Because of that there is no 0430 EST release out of the UK, and all eyes will be focused on the 0530 BoE Inflation Report.
0530 BoE Inflation Report - The last 4 straight quarters have produced very large down moves on GBP on a consistent basis; however, the picture seems to be changing in the UK and this could really go either way. I'm expecting a little bit of early buying on GBP/USD early in the session, but it likely be met with some stiff selling heading into this report as people could fear some sobering projections. Fundamentally, there are 3 aspects to look at in this report:
Quantitative Easing Language - This is the main thing the market is looking for on this report. Reassurring language that makes it seem as though the Asset Purchases are working well and further expansions are not needed will be GBP bullish, while language either concerned about its effectiveness or hints that the program is likely to be expanded either further will be GBP bearish.
Growth and Inflation Forecasts - Very pessimistic language on growth and worries about deflation will lead to selling pressure while more optimistic outlooks on growth and more concern on inflation will likely lead to buying pressure.
0830 US Core Retail Sales (0.2% expected) - This should have a good reaction out of the yen crosses as it did last month, but I expect some prenews buying pressure on those pairs like EUR/JPY, GBP/JPY and AUD/JPY as many news items like these have been surprising to the upside and some speculators may want to get in on it early.
If it comes out at 1.0% or higher, EUR/JPY should rally by 40-50 pips (if there is very noticable prenews buying though, those gains may be shortlived)
If it comse out at -0.8% or lower, EUR/JPY should sell off by 40-50 pips regardless of whether prenews buying materialized.
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