On Tuesday, the Euro-zone common currency, Euro, traded higher against the Japanese (JPY) and UK (GBP) counterparts on the back of rising Euro-zone ZEW Economic Sentiment. Investors will now look for further cues from this week's Euro-zone PMI data for both manufacturing and services sector, a leading indicator of economic health.
Given the backdrop, here is a technical update for important Euro cross-currency pairs - EURGBP, EURJPY, EURAUD and EURNZD.
Following the release of better-than-expected UK employment report on Wednesday, the pair dropped to a fresh 7-year low and now seems vulnerable to continue drifting lower to immediately test 0.7300 mark support, representing a short-term descending trend-line support. On the upside, 0.7400 might now act as immediate resistance. However, 0.7450 level would still remain important resistance on the upside and only a decisive strength above 0.7450 might negate the expectation of continuing bearish momentum for the pair. Should the pair manage to clear and sustains its strength above 0.7450 strong resistance, it could possibly extend the recovery, even beyond 0.7500 mark, towards its next major resistance near 0.7550 area.
Following a drop 130.00 mark to test its lowest level since Sept. 2013, the pair has been steadily marking some recovery as depicted by formation of an ascending trend-channel on short-term chart. However, when taken in context with the pair's fall from Dec. 2014 high, the short-term ascending channel seems to constitute towards formation of a bearish Flag chart pattern, possibly indicating resumption of near-term bearish trend once the lower trend-line support of the channel is broken. Hence, a decisive break below the lower trend-line support, currently near 134.30 would mark resumption of the depreciating move and the pair could immediately test 132.40-50 intermediate support. Further, the pair might remain vulnerable to continue weakening, even below 130.00 mark, towards testing 18.20-128.00 support area. On the upside, 136.60 horizontal zone, closely followed by 137.40-60 strong resistance area, marked by the upper trend-line resistance of the ascending channel, are likely to restrict further recovery for the pair.
Although the pair continues holding above the very important 200-day SMA support, it has still failed to decisively conquer 1.4800 strong resistance area, marked by 61.8% Fib. retracement level of Dec. 2014 to Jan. 2015 down-leg. From current levels should the pair decisively drop back below a strong support near 1.4500 mark, comprising of 200-day SMA and 38.2% Fib. retracement level, it seems more likely to be dragged further towards an intermediate horizontal support near 1.4350 level, which is closely followed by 23.6% Fib. retracement level support near 1.4300 mark. This 1.4300 mark could possibly act as strong downside support for the pair and only a decisive break below 1.4300 might turn near-term outlook for the pair bearish, making it vulnerable to continue its downward trajectory, even below 1.4000 mark, towards 1.3800 support area, marked by lows tested in 2014. Meanwhile, for the pair to register any meaningful recovery, it first needs to clear 1.4730-40 immediate horizontal resistance and sustain its strength to close above 1.4800 strong resistance area. Should the pair manage to conquer 1.4800 strong resistance, it could then possibly be headed immediately towards testing 1.5000 psychological mark resistance.
Extending its reversal from an important resistance confluence near 1.5750 area, comprising of 100-day SMA and 200-day SMA, the pair on Tuesday dropped below 1.5100 mark. The pair, however, rebounded from Tuesday's low level, marking the lower trend-line support of a short-term descending trend-channel formation on 4-hourly chart, and is currently holding above that 1.5100 mark. Should the pair continue holding above 1.5100 mark and clear 1.5160 immediate horizontal resistance, it could possibly make an attempt to clear 1.5200 round figure mark resistance towards testing 1.5300 mark resistance, representing the upper trend-line resistance of the descending channel. Alternatively, a drop back below 1.5100 mark now seems to exert additional pressure on the pair, taking it back towards testing the lower trend-line support of the channel, currently near 1.5000 mark, which if broken could eventually force the pair to test its next round figure mark support near 1.4900 level.
Senior Market Analyst
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