Despite of slightly weaker-than-expected US economic data, released on Monday, the US Dollar managed strengthen against majority of its counterparts on the back of a surprise rate cut by the People's Bank of China. On Tuesday, the greenback is holding its gains against EUR and CHF while is trading with minor weakness against GBP and NZD.
Investor this week will look forward to this week's key highlights, the most keenly watched economic indicator from the US, monthly jobs report, popularly known as Non-Farm payrolls data (NFP), scheduled for release on Friday. ALSO READ: NFP And Central Bank Meetings to Dominate The Market
Given the backdrop, here is a technical update on important major currency pairs - EURUSD, GBPUSD, NZDUSD and USDCHF.
Following a break below its immediate important support near 1.1280-60 level on Friday last week, the pair now remains vulnerable to retest 1.1100 level. Further, failure to hold 1.1100 mark support might increase the chances of continuing near-term weakness towards testing sub-1.1000 level, marking 61.8% Fib. expansion level. Meanwhile on the upside, previous support near 1.1260-80 region might now act as immediate resistance, which if conquered might provide further boost towards testing its next strong resistance near 1.1380-1.1400 zone. Only a sustained trade above 1.1400 mark might now negate the near-term bearish outlook, helping the pair to surpass 1.1500-20 strong resistance area and test its next strong resistance near 1.1630-50 area.
The pair reversed from 1.5550 important resistance, representing 38.2% Fib. retracement level of Sept. 2014 to Jan. 2015 down-leg and also nearing a confluence resistance comprising of the upper trend-line resistance of a short-term ascending channel formation and 100-day SMA. The pair subsequently dropped below the lower trend-line support of the ascending channel and is now trading below 1.5400 mark. From current levels, 23.6% Fib. retracement level near 1.5320 level, closely followed by 50-day SMA support near 1.5280-75 zone, seems to protect immediate downside for the pair. Should the pair now drop back below 1.5230-10 support area leading to a further weakness below 50-day SMA, it could possibly resume its depreciating move towards a very important psychological mark support near 1.5000 area, which if broken decisively seems to increase the near-term vulnerability of the pair to continue drifting lower to test 1.4800 support area, lows tested in July and March 2013. Meanwhile on the upside, the lower trend-line support break level near 1.5400 mark now seems to act as immediate resistance. Decisive strength above 1.5400 mark and a subsequent move above 1.5450 horizontal resistance is more likely to set the stage for continuing upward trajectory back towards testing 1.5550 strong resistance area.
The pair's recovery from sub-0.7200 level seems to face strong resistance near 0.7600 mark, coinciding with 61.8% Fib. retracement level of its fall from Jan. high to lows tested in early Feb. However, on 4-hourly chart the pair seems to form a short-term ascending trend-channel and is currently trading above 0.7500 mark, representing the lower trend-line support of the channel and nearing 50% Fib. retracement level. Should the pair now drop back below 0.7500 mark, it could possibly weaken back towards testing 0.7340-20 support area, representing 23.6% Fib. retracement level. Alternatively, should the pair continue holding above 0.7500 mark and move back above 0.7550 horizontal resistance, it could possibly attempt to retest 0.7600-20 intermediate resistance and eventually continue appreciating towards 0.7700 resistance, marking the upper trend-line resistance of the short-term ascending channel.
The pair rebounded from 0.9400 support area, marking 61.8% Fib. retracement level of its big downfall on Jan. 15, to decisively clear 0.9500 resistance area and is currently trading near 0.9600 mark. From current levels, the pair seems all set to continue its upward trajectory initially towards testing 0.9700-20 horizontal resistance and further towards 0.9780-0.9800 strong resistance area. On the downside, 0.9500 area now seems to have turned as immediate support area, which is followed by a strong support near 0.9400 mark. A decisive weakness below 0.9400 mark is likely to accelerate the pair's downfall back towards testing sub-0.9200 level, its next important support marked by 50% Fib. retracement level, with intermediate support near 0.9320-0.9300 region.
Senior Market Analyst
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