On Monday, the US Dollar remained weak against AUD and NZD and erased its earlier gains against EUR. USD, however, remained firm against the broadly weakening GBP. Going ahead, the Forex market will look forward to the developments over Greek drama from Euro-zone's finance ministers emergency meeting on Wednesday and US monthly retail sales data on Thursday from otherwise a tepid economic calendar.
Meanwhile, here is a technical update on important major currency pairs - EURUSD, GBPUSD, AUDUSD and NZDUSD.
Although the pair managed to recover from multi-year high, it failed to clear an important support turned resistance near 1.1510-30 zone and dropped back below 1.1300 mark. As could be seen on 4-hourly chart, the pair is currently trading close to its immediate support near 1.1270-60 area, which if broken would increase the possibilities of additional weakness to retest 1.1100 level. Moreover, failure to decisively clear 1.1500 mark and a subsequent drop back to 1.1100 mark would increase the vulnerability of the pair to continue drifting lower towards testing sub-1.1000 level, marking 61.8% Fib. expansion level. On the upside, 1.1360-70 horizontal zone now seems to act as immediate hurdle, which if cleared is more likely to boost the pair towards testing a descending trend-line resistance near 1.1460-70 zone. Only a decisive move above the descending trend-line resistance now seems to negate the short-term bearish outlook for the pair.
The pair once again failed to decisively break above 1.5350-60 resistance area, marking the upper trend-line resistance of a medium-term descending trend-channel formation on daily chart and also nearing 50-day SMA resistance. The pair, however, has managed to hold 1.5200 round figure mark on the downside. A break below 1.5200 mark is likely to take the pair back towards testing a short-term descending trend-line resistance break-point now turned support near 1.5160-50 zone. Should the pair fail to hold above 1.5150 resistance turned support, it could possibly resume its depreciating move towards a very important psychological mark support near 1.5000 area. The pair then might continue drifting lower in the near-term to test the lower trend-line support of the medium-term descending channel, currently near 1.4750 level. Alternatively, a decisive strength above 1.5280-1.5300 zone, marking descending trend-channel resistance break-out, now seems to open room for extending the short-term recovery for the pair, even beyond 50-day SMA resistance near 1.5375-80, towards 1.5500 mark resistance.
ALSO WATCH: Support and Resistance
Over the past two week, the pair seems to consolidate near 100% Fib. expansion level and every attempt to mark a meaningful recovery seems to get sold into above 0.7800 near 0.7850 area, eventually taking the pair back below 0.7800 mark. Hence, a break on either side would now indicate the near-term directional move for the pair. Should the pair start trading below 0.7750-30 immediate support area, it seems more likely to retest its recent lows support near 0.7625-20 area and continue dropping further in the near-term towards its next important support near 0.7470-60 zone, comprising of a short-term descending trend-line support and 161.8% Fib. expansion level. Alternatively, a decisive strength above 0.7850 now seems provide the required momentum for the pair to make an attempt to test an important psychological mark resistance of 0.8000, also nearing 61.8% Fib. expansion level support turned resistance.
Following its recovery from sub-0.7200 level, the pair now seems to have moved in a 100-pip trading range between 0.7450 on the upside and 0.7340 on the downside, respectively marking 38.2% and 23.6% Fib. retracement levels of the Jan. 15 to early Feb. down-leg. Hence, a sustained trade above 0.7450 seems to extend the recovery initially towards 50% Fib. retracement level resistance near 0.7525-30 area eventually towards 0.7600-0.7620, an important support break-point now turned resistance also coinciding with 61.8% Fib. retracement level. Meanwhile, a drop below 0.7350 level, the lower end of the trading range, is likely to find an intermediate support near 0.7300 area. However, major downside support is pegged near 0.7260-50 area and only a decisive break below this important support could possibly trigger resumption of the descending trend towards testing 0.7100 support area, marking low tested in March 2011.
Senior Market Analyst
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