Even after the US markets’ extended weekend on Monday, due to President’s Day holiday, inability of the European leaders to break the deadlock over Greece loan program, in Monday’s Eurogroup meeting, and the record low UK inflation numbers, published on Tuesday, caused market players to turn towards US Dollar buying during the early days of the week. However, minutes of the recent FOMC meeting, scheduled for release on Wednesday, can provide meaningful information relating to Fed’s next move that in-turn will be helpful in determining near-term US Dollar trend.
Given the backdrop, the following is a brief technical overview of the EURUSD, GBPUSD, USDJPY and the USDCAD.
Even after the looming uncertainty over Greek existence into the Euro-zone, EURUSD forms the symmetrical triangle formation, signaling a steep decline in volatility and a call to magnified volatility on breakouts. On the upside, the 38.2% Fibonacci Retracement of its January decline, near 1.1430, is likely immediate resistance for the pair. On the sustained break of 1.1430, the pair can rally towards 50% Fibo level and important support turned resistance level of 1.1530. Should the pair accelerates its up-move beyond 1.1530, it is likely to test 1.1760-70 resistance zone. Alternatively, a break of support line, near 1.1330, following the psychological level, also the 23.6% Fibo., near 1.1300, can provide considerable weakness to the pair towards testing 1.1210 – 1.1200 support-zone. Further, a daily close below 1.1200 is likely to be stopped near 1.1100 before testing the 1.1020 support level.
Ascending trend channel formation continue supporting near-term GBPUSD up-move; however, resistance line of the channel, also including the 76.4% Fibonacci Retracement of its January decline, is likely restricting considerable rally of the pair prices near 1.5460-65 region. Should the pair breaks the 1.5465 on a closing basis, it can rally towards 1.5600 mark, with 1.5500 psychological level being intermediate resistance. On the downside, the 1.5330, 1.5300 and 1.5260 are likely immediate support levels for the pair before it tests the support line of the channel, encompassing the 38.2% Fibo as well, near 1.5200. On the sustained break of 1.5200, the pair becomes vulnerable to extend its decline towards sub-1.5100 mark.
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Failure to sustain 119.30 level again draws down the USDJPY towards near 118.80 level with 118.00 psychological mark and the 38.2% Fibonacci Retracement Level of November – December up-move, near 117.00, being immediate supports for the pair. On the closing below 117.00, the pair becomes more likely to extend its decline towards 100-day SMA & the 50% Fibo., near 115.50 support. Given the pair’s ability to sustain the break of 119.30 on a closing basis, it can rally towards 120.50 and 120.80 resistance levels before rallying towards December high of 121.84. Moreover, an extended up-move beyond 121.84 is likely to be followed by the 123 mark, encompassing the 61.8% FE of the said move.
On Tuesday, the USDCAD broke below its support line of the symmetrical triangle formation and a close below the 1.2380 support level could weaken the pair towards testing 38.2% Fibonacci Retracement of its October 2014 – January 2015 up-move, near 1.2150. Moreover, a break of 1.2150 can extend the pair’s decline towards 50-day SMA, near 1.2030, before testing the 1.1950 support. On the contrary, a close above 1.2380 negates the breakdown and can pullback the pair towards testing 1.2485 – 1.2500 resistance zone, breaking which the 1.2550 resistance restrict the pair’s intermediate up-move before the pair rallies to 1.2650, encompassing the resistance line of the triangle formation. On the extended up-move beyond 1.2650, the pair can target 1.2800 mark.
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