After snapping its four weeks of winning streak, the US Dollar continued with its weakness against other major currencies on Monday. Also on Tuesday, the greenback is broadly trading weak against other major currencies, except against GBP. Investors this week will get the opportunity to further gauge the possibilities of a rate-hike by US central bank from this week's key US CPI data and final print of US GDP for the fourth-quarter of 2014.
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Given the backdrop, here is a technical update on important major currency pairs - EURUSD, GBPUSD, AUDUSD and NZDUSD.
Although the pair on Tuesday held 1.0900 mark, it is yet to clear 1.1000 round figure mark and 1.1045 FOMC swing highs, which could possibly act as immediate resistance levels. Sustained trade above 1.1000 mark, leading to a follow-up strength towards FOMC swing highs, opens room for extension of the pull-back immediately towards 1.1120-30 resistance area marked by 61.8% Fib. retracement level of Feb.-March 2015 down-leg. Alternatively, reversal from current levels and a subsequent drop below 1.0900-1.0880 support area, coinciding with 38.2% Fib. retracement level, has the potential to drag the pair initially towards 23.6% Fib. retracement level support near 1.0710-1.0700 zone, with 1.0800 mark as intermediate support, and eventually towards a very strong horizontal support near 1.0650 area. Further, failure to hold 1.0650 important support now seems to trigger fresh leg of weakness, even below its recent lows, towards testing 1.04000 level support marking 61.8% Fib. expansion level.
Following its wild swing on FOMC announcement day, the pair has been oscillating wildly between 1.5000-1.4700, 300 pips range. The pair is currently is witnessing a reversal from 1.5000 mark and is trading near 1.4900 mark. From current levels the pair could be expected to continue its reversal move from 1.5000 mark towards its immediate support near 1.4850 support level marked by 23.6% Fib. retracement level of its move from Feb. highs to March lows. On a decisive break below this immediate support could take the pair back towards testing the lower end of the trading range, 1.4720-1.4700 support area. On the upside, 1.4950 seems to act as immediate resistance, which is closely followed by a strong resistance near 1.5000 psychological mark also coinciding with 38.2% Fib. retracement level. Decisive break above 1.5000 mark now seems to lift the pair back towards testing FOMC swing highs, also coinciding with 50-day SMA resistance and nearing 61.8% Fib. retracement level, near 1.5170-1.5200 area.
The pair seems to have formed a firm base near 0.7600 mark and is now trading close to its immediate strong resistance near 0.7900-20 area marked by 50% Fib. retracement level of its down-swing from 2015 high to lows. Decisive strength above this resistance could easily lift the pair further towards testing a very important psychological mark support turned resistance level of 0.8000 mark, also coinciding with 61.8% Fib. retracement level. Should the pair manage to conquer 0.8000 mark hurdle, it could be all set to continue its recovery in the near-term towards testing 0.8200 mark resistance. Meanwhile on the downside, 38.2% Fib. retracement level near 0.7840-20 area seems to protect immediate downside. A drop below this immediate support and a subsequent weakness below 0.7800 mark could infuse additional weakness towards testing 0.7720-0.7700 support area, representing 23.6% Fib. retracement level. This 0.7700 area now seems to act as near-term strong downside support for the pair.
After breaking through an important resistance near 0.7600-20 area, thus completing a Double-Bottom bullish reversal pattern, the pair is comfortably holding above 100-day SMA. Should the pair continue holding above 100-day SMA, it seems more likely to continue its near-term upward trajectory towards the very important psychological mark resistance near 0.8000 level, which also happens to be the projected upside target of the completed bullish chart pattern. Intermediate resistance is pegged near 0.7820-30 area. However, should the pair fail to hold 100-day SMA support, currently near 0.7630-20 region, it could possibly retest the resistance break level, now turned immediate strong support, near 0.7620-0.7600 area. Moreover, weakness below 0.7600 mark is unlikely to get extended beyond 0.7550-40 horizontal support, which now seems to act as near-term bottom for the pair.
Senior Market Analyst
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