July 3, 2014 in FX Daily Dose
Forex Daily Dose- July 3, 2014: The FxDailyDose presents a quick snapshot of the price-action of The currency pairs which are in focus for today. This covers the immediate outlook, considering the overall picture. Please note that the daily outlook is for mainly for the currency pairs in focus and we may add or remove some of the currency pairs accordingly.
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USD/JPY has been finding the support continuously over 101.00 except two occasions when it had touched 100.75 during February 2014 beginning and then in May 2014 when it went down to 100.82. The failure to retest 100.75 indicates that the psychological support of 100.00 in very much in play and a bottom may already be in place. However, the current price-action is very close to the 55-day EMA, which is at 101.93. This keeps us neutral. Today’s non-farm payroll data and unemployment report from the U.S. should be able to give some direction to USD/JPY. The unemployment is expected to remain same at 6.3% but the non-farm data is expected to be slightly lower than the last release. However the ADP employment change had shown a better than expected results and there is a possibility that the non-farm results may come better. We stay neutral for the currency pair till the results for these economic releases come tonight. On the upside, a break over 101.93 should find another strong resistance near 102.16 first and then 102.37. Upside will be favored only if the pair can break over 102.37 decisively. On the downside support is expected to hold over 101.40.
EUR/USD had touched after recovering from 1.3503. This move has completed the 38.2% retracement of the fall from 1.3993 as we had mentioned at “EUR/USD Caught Between Uncertainties Of Fundamentals And Technical Factors“. We strongly believe that the currency pair already has it’s near-term bottom in place at the recent 1.3503 and further gains are favored. However, we will stay neutral today till the ECB interest rate decision at 11:45 GMT and the non-farm payroll data from the U.S. comes out at 12:30 GMT. In fact the total focus is at ECB interest rate decision as ECB had announced to keep the interest rate at 0.15% or even lower for an extended period of time. The same is covered on the update linked above. Any further rate cut today may take EUR/USD for some deeper dives below 1.3500. However, if the interest rate is kept same then though the non-farm payroll data may cause some volatile moves, but even then we will expect further gains towards 1.3748 or more. On the downside the first level of support is expected in the range of 1.3605 to 1.3610. Please check the short-term price-action channel in the above chart.
USD/CAD went as low as 1.0626 but then there has been a loss of momentum. The bearish shadows have nod disappeared but the current price action is touching a mid-term support trend-line which has been place since September 2012. Please check the weekly chart as shown above. Considering this we expect some upward consolidation. This outlook also finds it’s strength from the psychological aspects of 1.0500 ranges. Any dip below 1.0600 takes the currency pair in that psychological zone and hence some consolidation is expected even if another fall takes place subsequently. We would expect this consolidation to continue towards the resistance zone of 1.0730 to 1.0745. In case of resistance, even if USD/CAD falls below 1.0626, a very strong support will be expected above January 2nd’s 1.0588 to limit the fall.
USD/INR had failed at 60.54 during the recent attempt for recovery. The subsequent efforts above 60 again failed at 60.22 and 60.21 respectively. The highs have been getting lower and recently the pair fells to as low as 59.46 before losing some of the downward momentum. We expect some more recovery if support over 59.40 holds. However we expect the recovery to be limited to the resistance zone of 59.80 to 59.95 to bring another fall. USD/INR is especially expected to be in downward pressure till the Indian budget announcement during the next week. Post budget direction will of course depend on the outcome of the budget but considering the bullish moods and expectations, we expect the currency pair to weaken further towards 58.90 or more in the coming days.
EUR/GBP continues to be under strong bearish shadow. The current price action is at the level of the mid-term support trend-line and hence possibilities of some upward corrections can not be ruled out. However, considering the fact that the recent attempt of the recovery from the trend line’s has already failed once at the 5-week EMA, we favor the fall to continue. A decisive break of this support should take EUR/JPY towards the support zone of 0.7925/0.7930 first and then possibly below. This outlook will remain in place as long as the price-action stays below 0.8033. Any break of that resistance may extend the gains towards 0.8065/0.8070 resistance.
EUR/AUD seems to have lost the downward momentum, even though the currency pair is not out of the bearish shadows yet. In case there is no further interest rate cut by ECB today, we expect an upward correction towards 1.4740 to 1.4760 resistance zone. This outlook will remain in place as long as the price-action stays above the expected support level of 1.4382.
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