The explosive levels of volatility in the currency markets this trading week has caused the EURUSD to swing violently, easily cutting through formidable levels of resistance. This pair has turned bullish on the daily timeframe and may be set to surge higher as Dollar weakness offers an opportunity for bullish investors to attack. From a technical standpoint, the candlesticks are trading above both the daily 20 and 50 SMA while the MACD trades to the upside. Previous resistance around 1.1200 should become a dynamic support which should provide a platform for prices to bounce back towards 1.130 and potentially higher. A bearish move back below 1.105 suggests bullish weakness and invalidates this daily bullish outlook.
Fundamentally the Sterling is bearish and the elevated concerns over the immeasurable impacts of a Brexit to the UK economy should keep this pair depressed moving forward. The bullish rally this week has nothing to do with an improved sentiment towards the Sterling, but Dollar weakness and erratic investor behavior. Prices are set to decline and a solid breach back below 1.4400 may suggest a further decline towards 1.4200. From a technical standpoint, although prices are trading above the daily 20 SMA, a weekly close back below 1.4400 should open a path towards 1.4200 and potentially lower. A strong move back above 1.4500 suggests bearish weakness and puts this bearish setup on standby.
Dollar vulnerability and Yen appreciation from the growing risk aversion has created a catalytic cocktail which empowered the USDJPY bears to sending prices to levels not seen since 2014 at 110.70. This pair is immensely bearish and may be set to sink further as long as the 114.50 resistance is defended. From a technical standpoint, prices are below the daily 20 SMA while the MACD is also trading lower. Previous support around 112.50 should act as a dynamic resistance for another drop towards 110.00.
The AUDUSD cut through the stubborn 0.7500 resistance and may be poised for further inclines as Dollar weakness offers a chance for AUD bulls to take the front seat. This pair is bullish on the daily timeframe and may be set to incline towards 0.7700 as long as prices can keep above the 0.7500 dynamic support. Lagging indicators such as the moving averages and MACD which point to the upside concur with the bullish view on the AUDUSD.
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