On Monday, the US Dollar witnessed mixed performance against other major currencies as investors look forward to a series of top-tier economic events scheduled at the beginning of a new month in order to determine the near-term direction of the market. The greenback strengthened against GBP and JPY but was weak modestly against AUD and NZD.
On Tuesday, however, surprise rate-cut by RBA trigger sharp fall for AUD and NZD while better-than-expected UK construction PMI figure lifted GBP against USD. USDJPY is trading with minor losses. Given the backdrop, here is a technical update on GBPUSD, USDJPY, AUDUSD and NZDUSD.
The pair continues finding support near 1.5000 psychological level and is now moving higher to test 1.5100 immediate resistance mark. On 4-hourly chart, however, the pair seems to trading within a descending trend-channel formation, suggesting that a move above 1.5100 resistance is likely to confront another resistance at the upper trend-line resistance of the channel, near 1.5170-80 area. However, should the pair manage to break above the upper trend-line resistance it is likely to rally towards its next major resistance near 1.5300 area, comprising of the upper trend-line resistance of a well-established medium-term descending trend-channel and 23.6% Fib. retracement level of the pair's down-leg from Sept. 2014 to low tested in Jan. 2015. Alternatively, a break below 1.5000 mark would now mark a break-down and could drag the pair initially towards 1.4900 support, marking the lower trend-line support of short-term descending channel and eventually towards testing the lower trend-line support of the medium-term trend-channel, currently near 1.4870-60 area.
The pair seems to have decisively broken below a short-term ascending trend-line support near 117.50 and hence remains vulnerable to extending the near-term pull-back towards another short-term ascending trend-line support near 116.00 mark. However, should the pair manage to climb back above 117.85 immediate horizontal resistance, it could possibly extend the up-move towards 118.70-80 zone, marking a short-term descending trend-line resistance and also coinciding with 50-day SMA. On a clear strength above this resistance, the pair could possibly make an attempt to retest 120.00 resistance area, also coinciding with a descending trend-line extending from Dec. 2014 highs through intraday high touched in Jan. 2015. Further, a decisive move above 120.00 mark would negate expectations of a corrective pull-back and the pair might rally back towards testing Dec. 2014 highs resistance near 121.50-70 area.
RBA on Tuesday, surprised market by cutting its benchmark interest rate to a record low of 2.25%, taking AUDUSD to its lowest level since May 2009. The pair, however, managed to find some relief from a support confluence near 0.7620-10 area, comprising of descending trend-line support extending from Nov. 2014 and a short-term descending trend-line support joining lows tested in Jan. 2015. Should the pair now fail to hold this support confluence, it clearly seems to be headed towards testing 161.8% Fib. expansion level support near 0.7460-50 area. On the contrary pull-back from support confluence points towards a possible bounce from near-term oversold conditions. Any pull-back from current levels might now face immediate resistance near 0.7700-20 horizontal zone, which is followed by 100% Fib. expansion level support break-point, now turned strong resistance near 0.7780-0.7800 area.
The pair on Tuesday dropped to its lowest level since Mar. 2011 but although it seems to have found some intermediate support near 0.7200 round figure mark, it remains within a well-established short-term descending trend-channel formation, visible on 4-hourly chart. Hence, from current levels, should the pair fail to clear 0.7220-40 immediate horizontal resistance area, it seems more likely to resume its downward trajectory towards testing the lower trend-line support of the short-term descending channel, currently near 0.7100 round figure mark. However, should it manage to decisively clear 0.7220-40 resistance, it could possibly extend the bounce towards 0.7300 resistance area, marking the upper trend-line resistance of the descending channel.
Senior Market Analyst
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