Following its last week's big up-surge led by blockbuster non-farm payrolls data, the US Dollar on Monday witnessed some profit taking move against EUR and GBP. The greenback, however, held its ground against AUD and NZD. Investors will now look for some additional cues to gauge the strength of broader US economic recovery from Thursday's US monthly retails sales data, from otherwise a tepid US economic calendar.
Meanwhile, here is a technical update on important major currency pairs - EURUSD, GBPUSD, AUDUSD and NZDUSD.
On Tuesday, the pair dropped below 1.0800 mark to hit a fresh 12-year low. From current levels the pair 1.0700 round figure mark seems to provide some intermediate support. However, in the near-term the pair seems vulnerable to continue its depreciating move towards 100% Fib. expansion level support near 1.0650 level. Meanwhile on the upside, 1.0850 now seems to provide immediate resistance. Strength above this immediate resistance and a subsequent move above 1.0900 mark seems to help the pair to reclaim 1.1000 mark. The pair remains in a well-established down-trend, which seems more likely to continue towards testing 100% Fib. expansion level support. However, considering the short-term oversold conditions (RSI below 30), possibilities of a short-covering rally back towards 1.1000 cannot be ruled out.
Continuing with its reversal from 100-day SMA, the pair subsequently dropped below 50-day SMA support. The pair, however, has held 1.5000 psychological mark support. A decisive break below 1.5000 mark is likely to be followed by continuation of the near-term weakening trend towards 1.4800 mark support area, representing 61.8% Fib. expansion level. Alternatively, should the pair continues holding above 1.5000 mark and manages to strengthen back above 50-day SMA resistance, currently near 1.5240-50 area, the pair could possibly extend its upward trajectory back towards reclaiming 1.5500 mark.
On Tuesday, the pair decisively broke below 0.7700 to nearly test 0.7600 mark, its lowest level since May 2009 and is currently trading near 0.7630-40 level. From current levels, drop below 0.7600 mark is likely to be followed by an immediate test of 61.8% Fib. expansion level support near 0.7550-40 area. This is likely to be followed by weakness towards an intermediate support near 0.7450-40 area. Although, 0.7450 might provide some intermediate support but a break below 0.7550 level is likely to continue in the near-term towards testing 0.7300 mark support, marking monthly lows tested in May 2009 and also coinciding with 100% Fib. expansion level support. On the upside, 0.7700 mark, which is closely followed by 0.7750-60 area, now seems to act as immediate resistance. A decisive move above 0.7750 resistance could possibly lift the pair further towards its next major resistance near 0.7840-50 area. Considering the recent price action, only a decisive strength above 0.7850 would now help the pair to register any meaningful recovery and negate short-term bearish outlook.
Pair's reversal from 0.7600-20 strong resistance area is extending for fourth consecutive day and the pair is now within striking distance of its recent daily closing low support near 0.7260-50 area. A decisive break and close below 0.7260-50 support now seems to exert additional and is more likely to drag the pair towards re-testing sub-0.7200 level and eventually extend towards testing sub-0.7100 level support, marking 61.8% Fib. expansion level. Meanwhile on the upside, 0.7330-50 now seems to act as immediate resistance, which is followed by a strong resistance near 0.7440-50 horizontal area. Rebound from daily closing low support and a subsequent strength above 0.7450 resistance now seems to provide the required momentum to lift the pair back towards 0.7600 important resistance, which if conquered is likely to boost the pair further, possibly even beyond 0.7700 mark resistance, towards 0.7750 level.
Senior Market Analyst
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