FX Daily Dose – January 7, 2014
January 7, 2014 in FX Daily Dose
Forex Daily Dose- January 7, 2014: The FxDailyDose 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 tried to break the support of 104.00 and hence 22-day EMA which we have been mentioning for past 2 days but the break could not sustain and the pair jumped up immediately from 103.91 i.e. from 9 pips below 104. The previous daily candle was also a Doji styled candle which indicate complete uncertainty. Such a candle after a sharp drop may also cause an upside reversal. However, our outlook remains neutral and unchanged for the immediate price-action and as follows: ” 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 found resistance exactly at 55-day EMA level after trying to recover from 1.3571. There is no change in the outlook from what we had indicated in the previous update and we our views remain same that EUR/USD’s fall had 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. On the upside the first resistance is expected at or below 1.3675. In case the mentioned supports hold and a break over 1.3675 takes place 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 seems to be maintaining the support pattern at 55-day EMA. The recovery extended slightly to 1.0686 but the price is still 10 pips below the resistance level which we have been indicating from previous 2 updates. The outlook remains unchanged and we have to repeat our views once again 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 broke the support of 97.59 which we had been indicating in previous 2 updates. Yesterday’s support had come just 2 pips above that but the attempt of another recovery had failed at 98.47 before the pair went 9 pips below the said support to touch 97.50. We now expect some more consolidation towards a strong support zone of 97.19 to 97.25. This support level represents the previous support as well as the support level of 55-day EMA. Till the support holds at 97.19, another recovery to retest 99.15 will be expected. However as we had mentioned in last to last 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 dropped further slightly to 1.6337. The support came just over 55-day EMA and 15 pips above the support zone of 1.6316 to 1.6322 which we have been indicating from past 2 updates. Further drop towards this support zone can not be ruled out but before that we expect some more recovery towards 1.6455. 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 extended the recovery slightly more to 0.8331. The resistance came at 22-day EMA. Our outlook remains unchanged from yesterday. We expect further upward recovery but will stay neutral for that till a break over the recent 0.8331 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 and may target 0.8414 to 0.8423 resistance zone.
EUR/AUD has extended the recovery to 1.5286 but seems to have stuck between the 55-day EMA support and 22-day EMA resistance. The price-action is in a volatile sideways mode and that is keeping us neutral. As we had also mentioned yesterday that the support at 1.5116 was more like a a psychological support of the approaching psychological ranges of 1.5000. A break above the recent 1.5286 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 remains in a very narrow sideways mode below the resistance zone of 62.44/62.50 which we have been indicating during previous updates. 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