The EURUSD experienced a hefty decline during trading on Tuesday following the soft December European inflation report which renewed concerns over the potential slowdown in economic momentum in the European economy. Since the 3rd of December the EURUSD has traded in a wide range but with prices sinking below 1.075 for the first time since early November 2015, bears have been provided with the inspiration to take the front seat once again. Fundamentally the strengthening divergence in both monetary policy and economic sentiment between the United States and Europe have made this pair quite bearish, whilst the fact that the candlesticks reside below the daily 20 SMA act as encouragement for sellers to attack prices further. With this pair technically bearish on the daily timeframe, previous support at 1.080 may transform into dynamic resistance which should provide a foundation for a smooth decline towards 1.064.
Sentiment towards the Sterling continues to face abrasion from the Bank of England’s clear reluctance to raise UK interest rates while investors’ attraction rapidly fades as ongoing reports suggest that the UK pound may be the most overvalued currency in the world. The GBPAUD is technically bearish and heavily depressed in the bigger picture. The pair currently trades below both the daily 20 and 200 SMA, while the MACD trades deep into the downside. A solid break back below 2.040 may encourage sellers to send prices lower to the next relevant level based at 2.000. If prices manage to claw back above 2.070 this may suggest bearish weakness and invalidates this daily bearish outlook on the GBPAUD.
The GBPJPY has declined with force for five consecutive trading weeks and remains heavily bearish on the daily timeframe. This momentum is strong and should provide enough force to send prices lower towards the next relevant support at 173.50. From a technical standpoint, prices are trading below the daily 20 and the MACD has crossed deep into the downside. Prices are set to correct but this may be after the 173.50 target is hit.
The AUDCAD is very bullish on the daily timeframe as there have been consistently higher highs and higher lows. Prices are currently finding support above the daily 20 SMA, while the MACD trades deep into the upside. Bulls need to break above 1.007to provide buyers with encouragement to send prices towards the highs of 1.0165.
The USDZAR is technically bullish on the daily timeframe as there have been consistently higher highs and higher lows. Previous resistance at 15.50 may become a dynamic support which should invite for a further incline towards 16.00.
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