FX Daily Dose – January 6, 2014
January 6, 2014 in FX Daily Dose
“Forex Daily Dose” presents a quick snapshot of the price-action of EUR/AUD, EUR/GBP, USD/INR, USD/CAD, EUR/USD, GBP/USD, USD/JPY and AUD/JPY for the immediate and medium-term outlook. Please note that the daily outlook is for current pairs in focus and we may add or remove some of the currency pairs accordingly.
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USD/JPY had extended it’s fall to 104.07 before recovering to 104.95 and falling back to 104.15 after failing below the psychological level of 105. As of now there is no change in our outlook from what we had mentioned during the previous update. The price action has been trying to break the 22-day EMA support but has not been able to sustain below it. This support trend has been in place for close to 2 months. Another immediate recovery should take place as long as the support holds at or above 104.00 but a break over 105.00 but more importantly 105.44 is required to expect the resumption of the trend. However, any failure of 104.00 support may result in deeper consolidations first towards 103.77 or below. In fact any break of 103.77 will change the immediate outlook slightly towards bearish to target the next support zone of 103.03 to 103.20.
EUR/USD extended it’s fall to 1.3571 but lost momentum well ahead of the psychological level of 1.3500. The sharp fall which took place with the near year beginning was slightly unexpected but not unnatural because of the strong psychological resistance of 1.4000 level. Further drop can not be ruled out but a strong support is expected in the range of 1.3524 to 1.3528. Even if this support fails, 1.3500 level should provide a stronger support. However any decisive break of 1.3500 but more specifically 1.3490 will bring in some real bearish sentiments and such a move will be the first step in suggesting that a near-term top might have already been reached. Such a move, if takes place, should target 1.3400 first and possibly below. In case the mentioned supports hold then a recovery towards the resistance at 1.3728 will be expected. On the upside the first level of resistance should hold in the range of 1.3728 to 1.3749. Any failure of this resistance will be the first indication that the consolidation might be over. If such a move takes place then another test of 1.3800 should be in the pipe-line. Another break over 1.3800 should target a retest of 1.3894 and then possibly 1.3940.
USD/CAD found resistance 18 pips below the resistance level mentioned during the previous update. The recovery attempt failed at 1.0678 and the price-action fell into a sideways mode. However the mentioned support of 55-day EMA continues and there is no change in our outlook. We will repeat what we had mentioned earlier for the ready reference: ” The recent high was lower than the previous high but in the same way the subsequent lows have also been getting higher. Sooner or later we expect another upward jump but considering the overall volatile sideways moves, we stay neutral initially. On the upside the first resistance is expected at 1.0696. Any failure of that resistance should target 1.0723 to a.0737 resistance. We will repeat what we had mentioned in the previous update that with any break over 1.0744 to 1.0750 resistance zone we would expect USD/CAD to target 1.0854 of the week of May 24, 2010. Before the pair had touched 1.0854 during May 2010, an extremely strong resistance had continued to be in the range of 1.0744 to 1.0750. The recent resistance was felt just 7 pips below this range and that indicates that this resistance may prove to be critical. The possibilities of another recovery will remain in place as long as the price action remains over 1.0581. Any break below this support should first target 1.0561 minor support and then possibly 1.0520.”.
CAD/JPY had found support 2 pips above the support level mentioned by us during the last update. The pair then recovered to 98.69 but fell again to 98.11 before trying to recover again. There is no change in our outlook and we will repeat what we had mentioned earlier, with minor modifications, for the ready reference: ” The fall from 99.15 was quite natural because of the psychological resistance of the approaching 100.00 level. A minor support is expected at or over 97.59 and any failure of that should make CAD/JPY to target a strong support level of 97.19. Till the support holds at 97.19, another recovery to retest 99.15 will be expected. However as we had mentioned in the previous update, Even if CAD/JPY breaks above 99.15, a strong resistance will be expected at 99.38. This level had proved to be a minor support during May 2013 and now we expect it to turn into a resistance. Sooner or later we expect a break of this resistance and a test of 100.00, however. On the downside any failure of 97.19 support should bring further consolidation towards the support zone of 96.30 to 96.48.”.
GBP/USD extended its fall to go as low as 1.6348. The price-action is still above the second level of support indicated by us during the previous update i.e. 1.6316 to 1.6322. Further drop towards this support zone can not be ruled out now. As we had mentioned earlier also, the immediate outlook will start turning towards bearish side only with any move below 1.6316 and such a move mat extend the consolidation to 1.6217 or below. On the upside the first level of resistance is now expected at 1.6444 but we will stay neutral for the upside till the price-action remains below the next resistance zone of 1.6474 to 1.6493 and any break of that resistance will be the first indication that the downward consolidation might be over. A better indication will come with another break over 1.6500, which should take GBP/USD first to the immediate resistance above that at 1.6533 and then possibly to retest 1.6603 and above.
EUR/GBP had failed in recovery from 0.8270 after touching 0.8319. However the subsequent drop did not retest the low of 0.8270 and the support came at 0.8275 to take the pair to 0.8316. We expect further upward recovery but will stay neutral for that till a break over the recent 0.8319 does not take place. Even if this break takes place, as mentioned during the previous update, we will expect a very strong at 0.8350 or at the most at 0.8380. If this resistance holds and if the pair manages a break below 0.8252 then the continuation of the ongoing downtrend will be expected to take it to 0.8160 to complete the 61.8% retracement of the gains from 0.7755 to 0.8815 and then possibly 0.8085. On the upside any break over 0.8392 may delay the expected further fall.
EUR/AUD extended it’s fall to as low as 1.5116 before falling into a sideways mode between 1.5116 and 1.5233. The support came above the 55-day EMA but more than that we take it as a psychological support of the approaching psychological ranges of 1.5000. We stay neutral with the current price-action. If the resistance at 1.5233 holds and a break below the recent1.5116 takes place then further downward consolidation can not be ruled out. This can extend to as low as 1.5017 to 1.5020 support zone of the sideways price action during December 5 to December 10, 2013. However we will expect a very strong support in or above that support zone. If that support fails then the bearish sentiments will come into the picture and the focus will turn back towards 1.4858 or even 1.4799. On the upside, a break over 1.5233 may bring some more recovery towards 1.5311 or more but any significant upward gains will only be expected if the price-action breaks above 1.5365 to 1.5382 resistance. The important point to observe is that though EUR/AUD tried to break above 1.5500 psychological level time and again but failed to sustain over it. This facts suggests that at best we should expect some volatile sideways moves below 1.5500 and even some deeper consolidations cannot be ruled out.
USD/INR found resistance exactly in the resistance zone indicated by us during the last update i.e. 62.44/62.50 range. The pair remained in a sideways mode after touching 62.48. There is no change in our outlook and hence we will repeat what we had mentioned earlier i.e. “We remain neutral initially and our outlook stays neutral as long as there is no upward break of the resistance of the 62.44/62.50 range. If this resistance fails then further gains towards 63.00 may take place but we will expect any recovery to be limited below 63.40 to bring another fall. On the downside any break below 61.33/61.30 will be the first indication of topping. Overall we remain in the favor of further drop in the near-term and the only thing which is sustaining USD/JPY from further downward consolidation is the psychological support of 60.00. On the upside the first resistance is expected below 62.00 but overall only a break above 62.40 to 62.50 resistance will indicate the possibilities that a short-term bottom is in place.”..
You may also check the daily and weekly analysis for 8 currency pairs on the following pages:
- EUR/USD daily analysis
- USD/JPY daily analysis
- GBP/USD daily analysis
- USD/CHF daily analysis
- AUD/USD daily analysis
- EUR/JPY daily analysis
- GBP/JPY daily analysis
- AUD/JPY daily analysis