In spite of the prior week's palpable selling wick, last week's movement chalked up a nice-looking weekly bullish engulfing candle, which, as you can see, forced the pair to cross swords with a weekly resistance level coming in at 1.0819. This – coupled with the 2016 yearly opening level located just above it at 1.0873, could very well see buying fade this week.
Dollar Index (99.72) has been trading flat for the last 4 sessions with the downside momentum slowing down considerably but it still needs an initial break above 100.25 to take it higher to the major resistance of 101.00. While the chance of a retest of the long term support at 99.00 can't be ruled out yet, the bulls may try for a rally in the next few sessions.
The EUR/USD pair extended the rally coming from early January in these last few days, reaching a new yearly high of 1.0828, settling finally at 1.0777, above a bearish 100 DMA for the first time since October 2016. Dollar's weakness was fueled by a neutral FOMC's stance in its latest meeting, and a mixed employment report coming from the US. The January NFP report showed that job's creation remains strong, as the country added 227,000 new jobs, but wage growth slowed to 2.5% yearly basis from previous 2.9%, while on a month-to-month comparison wages advanced 0.1% against 0.2% expected or the 0.4% previous. The unemployment rate ticked higher, from 4.7% to 4.8% as the participation rate increased to 62.9%, a four-month high.
EURUSD - With the pair closing higher the past week, further bullishness is envisaged in the new week. On the upside, resistance comes in at 1.0850 level with a cut through here opening the door for more upside towards the 1.0900 level. Further up, resistance lies at the 1.0950 level where a break will expose the 1.1000 level. Conversely, support lies at the 1.0700 level where a violation will aim at the 1.0650 level. A break of here will aim at the 1.0600 level. Its weekly RSI is bullish and pointing higher suggesting further strength. All in all, EURUSD faces further upside pressure short term.
GOLD - The commodity continues to hold on to its upside pressure as it looks to follow through higher in the new week. On the downside, support comes in at the 1,210.00 level where a break will turn attention to the 1,200.00 level. Further down, a cut through here will open the door for a move lower towards the 1,190.00 level. Below here if seen could trigger further downside pressure targeting the 1,180.00 level. Conversely, resistance resides at the 1,230.00 level where a break will aim at the 1,240.00 level. A turn above there will expose the 1,250.00 level. Further out, resistance stands at the 1,260.00 level. All in all, GOLD looks to strengthen further.
As you can see, price has come back to test a daily horizontal level that has previously been an area of interest. As always, it's not just that the level held in the past that makes it significant, but the way in which the level holds. That is, did price simply hover around the level for a long period of time, or was there a V shaped bounce straight off it?
Next week is all about the Australian and New Zealand dollars. We will hopefully find out which of the two currencies is stronger relative to the other one as central banks of both nations have their policy decisions. In addition, we will hear from governors of both the RBA and RBNZ, not to mention there will be some important data from the region. The volatility in the AUD/NZD therefore should go up by a good few notches. I think at the moment the RBNZ is a touch more dovish than the RBA, so I therefore expect the AUD/NZD to rise in the coming weeks.
The first non-farm payrolls report of the year will be released later at 13:30 GMT. It is probably not going to be the most important one for the year. That is because Donald Trump's promise of creating more jobs will take time to come to fruition, if it does at all. Nonetheless, the available leading employment indicators suggest we could see a big print anyway. But it also means that the scope for disappointment is now quite high. So, expect to see a potentially sharp move in the dollar and by extension gold when the data is released.
Due to falling below the weekly R1 at 1.0761 against the US Dollar, the common European currency began Friday's trading session just below that level. The currency exchange rate remained unchanged during the morning hours. However, from a technical perspective by looking at the daily chart the pair had no support until the level of 1.0709, where the weekly PP is located at. It is most likely that there are other support levels on different timeframes, which will hinder the fall of the Euro. Although, the pair will still most likely reach the weekly PP.
Thursday ended with the Cable falling significantly below the anticipated 1.26 level. The immediate support, namely the weekly PP at 1.2532, was crossed yesterday, which is now acting as the nearest resistance. Today's GBP/USD driver will be the US NFP data, a strong reading of which is likely to cause the exchange rate to drop lower. The 1.24 level will then be the main target, as a tough demand cluster is located there, which is capable of limiting the losses. On the other hand, disappointments in US fundamentals could help the Sterling erase most of Thursday's losses, with the resistance around 1.2680 preventing the Pound from climbing further up.
There were no surprises in the USD/JPY pair's performance yesterday, as the 112.60 psychological support remained intact in spite of the Yen taking the upper hand. From the technical perspective the Buck should now rebound, but with gains being capped around the 114.50 mark, where the monthly and the weekly PPs rest, as well as the 20 and the 55-day SMAs. A strong US NFP reading today could also indicate to a possible rate hike as early as in March, providing the US Dollar with a solid boost. However, technical indicators insist a bearish development is more probable, with the only strong support being the area around 110.25.
During the early hours of Friday's trading session the yellow metal remained near the 1,215 mark, as it struggled to find support after the previous fall. Although the bullion traded above the weekly R1, which is located at 1,213.16, it could be easily seen that the level of significance was rather ignored by the metal, as it had reached below it. Actually the commodity price did not fall, because it encountered the lower trend line of a medium term ascending channel. Due to this factor and the general upwards aimed trend, it is likely that the bullion will rally and attempt to break the resistance cluster near the 1,220 level.
The Aussie eases from fresh multi-week high at 0.7694 that was posted on yesterday’s strong bullish acceleration. Dips were so far contained above broken Fibo 76.4% barrier at 0.7630 that now acts as initial support and guards lower pivot at 0.7602 (daily Tenkan-sen). Strong bullish setup of daily studies might be dented by overbought conditions, as slow stochastic and RSI are turning lower that could be seen as correction signal.
Strong supports at 112.50 and 112.00 resisted repeated attacks, after probes below 112.50 base were stopped at 112.06/04 on 31 Jan / yesterday. Also, the pair managed to close above 112.50 base during past three days that signals strong hesitation at key support zone. Near-term price action is directionless in past few sessions, holding above 112.00 pivot but remains capped under sideways-moving daily Tenkan-sen at 113.70.
Cable is consolidating above bull-channel support at 1.2500 that contained yesterday's strong fall. Long bearish daily candle that was formed yesterday weighs on market and risks further weakness. Break below channel support would open way towards next strong supports at 1.2430 (daily cloud top) and 1.2411 (31 Jan former correction low).
The pair is struggling at key barriers, as yesterday’s strong rejection at daily cloud top formed Shooting Star pattern and generated reversal signal. Near-term studies are in mixed mode, while bullish structure on daily chart wouldn’t be harmed significantly while lower pivots at 1.0738/23 (rising 10 SMA / daily Tenkan-sen) stay intact.
On the updated chart of GBP/USD, we see price undergoing a flat correction in blue wave 2, after a five wave movement unfolded in the previous wave 1. As such we are now undergoing a wave C) fall on intraday basis, which can make a reversal higher around the 1.2411 level.
The EUR closed marginally lower yesterday after snowballing south from the weekly resistance level seen at 1.0819, which, as far as we can see, was also aided by the better-than-expected US jobless claims report. With this in mind, we feel there is a good chance that price will likely take out the H4 support area at 1.0765-1.0753 today, and maybe pull down to the 1.07 boundary. Still, to get past this psychological number, the bears would not only have to overcome 1.07, but also a H4 demand area at 1.0684-1.0709 and a daily support hurdle coming in at 1.0710 (the next downside target on the daily timeframe).
The EUR/USD showed a 2nd bearish bounce at the 88.6% level resistance level, which keeps the wave 2 (brown) structure intact. A break below the support (blue) trend line is needed before a bearish breakout is possible.
Dollar Index (99.84) has made low at 99.23, just above the long term support of 99.00, before bouncing back close to 100. It still needs to go much higher above the resistance of 100.75-101.00 before the downside risk gets negated. The US Jobs report to be released tonight may determine the near term path.
The EUR/USD pair closed the day marginally higher, a couple of pips below the 1.0800 threshold, but managed to extend its gains up to a fresh 2017 high of 1.0828 intraday. The American dollar traded softly against all of its major rivals, undermined by FOMC's monetary policy statement that failed to provide any signal on upcoming rate hikes, but European currencies were unable to take as much advantage as commodity-related ones. The common currency found support in local data, as in the EU, producer price inflation surged in December by 0.7% when compared to November, and up to 1.6% YoY from previous 0.1%, the fastest pace in nearly four years, driven by soaring energy costs, according to Eurostat.
GOLD - The commodity rallied on Thursday following its recent bullish short term uptrend. On the downside, support comes in at the 1,210.00 level where a break will turn attention to the 1,200.00 level. Further down, a cut through here will open the door for a move lower towards the 1,190.00 level. Below here if seen could trigger further downside pressure targeting the 1,180.00 level. Conversely, resistance resides at the 1,230.00 level where a break will aim at the 1,240.00 level. A turn above there will expose the 1,250.00 level. Further out, resistance stands at the 1,260.00 level. Its daily RSI is bullish and pointing higher suggesting further strength. All in all, GOLD looks to strengthen further in the days ahead.
In a unanimous vote, the Bank of England has left its monetary policy unchanged as had been widely expected. But the focus was always going to be on the Inflation Report and the minutes, and Mark Carney's press conference. In the Inflation Report, there were a few surprises as the Bank said some of the monetary policy committee members had signalled increased concerns about inflation and that the stronger GDP made it harder to tolerate above-forecast CPI. Indeed some members were "a little closer" to their tolerance thresholds about rising levels of inflation.
On Thursday morning the common European currency gained against the US Dollar, as the currency exchange rate approached the 1.08 mark. However, the Euro struggled to gain further gains, as it was being kept down by the 100-day SMA at 1.0792. It is highly unlikely that the pair will move upwards and score additional gains, as already at 1.0803 the long term pattern's upper trend line is located at. The trend line has kept the rate down for the past two trading sessions, initially stopping a jump of the Euro on Tuesday.
Despite a strong US ADP Employment Change reading on Wednesday, the Sterling still outperformed the US Dollar, successfully climbing over the 1.26 major level. Resistance was encountered only around 1.2675, where the 23.60% Fibo and the weekly R1 rest. This group of levels keeps providing relatively strong resistance today, which is likely to cause the Cable to undergo a small bearish correction—what usually occurs ahead of the Friday's NFP data if the figures are anticipated to disappoint. As a result, the GBP/USD pair is expected to slide back down towards the 1.26 mark.
The USD/JPY currency pair behaved in accordance with expectations yesterday, having bounced back from the 112.60 psychological support level. However, the pair was unable to retain its positions above the weekly S1, with trade closing at 113.26. Today technical indicators suggest the US Dollar is to edge lower, but the 112.60 mark is still expected to remain intact. A breach, however, would only spark more bearish momentum in the medium term, with the 110.00 mark becoming the next main target. Any positive developments are likely to be capped around 114.50, where the weekly and the monthly PPs, as well as the 20 and the 55-day SMAs are located at.
During the early hours of Thursday's trading session the yellow metal surged and broke through the first weekly resistance level, which is located at 1,213.16. Due to that the metal has a free path up to the 1,219.20 mark, where the 38.20% Fibonacci retracement level is located at. However, that will be a hard resistance to break, as the Fibo is also supported by the upper Bollinger band at 1,219.89 and the 100-day SMA at 1,221.72. Although, if the resistance cluster would be broken, the bullion might jump above 1,235 level.
EURGBP is making a perfect reversal lower from our resistance area, marked with yellow box. It was a textbook bearish reaction which is looking very strong based on personality, so it's probably an impulse that is headed beneath 0.8468 low. Broken channel also confirms a completion of a corrective wave up at 0.8634.
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