Currencies in Focus - The Near-Term Outlook

"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. 




NeutralUSD/JPY fell rather sharply after touching 105.44 to touch 

104.54 and realizing some support there. The drop as of now does not change the views and the overall outlook remains positive. The price action is still above the recent support trend of 22-day EMA. This support trend has been in place for close to 2 months. Further consolidation is expected first towards 104.20/104.30 and may also extend to 104.00. Another immediate recovery should take place as long as the support holds at or above 104.00. However any failure of this 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.


NeutralEUR/USD started the new year with a sharp drop which has broken the support of 55-day EMA and hence the recent support pattern. The pair has touched the low of 1.3629 which is slightly above the previous support of 1.3625. Further downward consolidation can not be ruled out but we will wait for any break below 1.3625 as the confirmation for this view. Even with such a move another immediate support will be expected near 1.3615. However, any break below 1.3615 will turn the focus downwards for 1.3543 or more. 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.


bullishUSD/CAD found support at 55-day EMA. 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.


NeutralCAD/JPY fell very sharply after touching 99.15. The fall has been quite natural because of the psychological resistance of the approaching 100.00 level. Till now the price action has touched 97.71 and further drop can not be ruled out. A minor support is now expected at 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.


NeutralGBP/USD fell sharply to 1.6410 after touching 1.6603. Though further consolidation can not be ruled out but a better indication will only come if the support at 1.6400/1.6394 fails. Such a failure will represent the failure of the 1.6500 key psychological level. This previous psychological resistance level should now act a pulling force. If the support at or above 1.6394 fails then further consolidation towards 1.6316 to 1.6322 support zone should take place. 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 1.6460 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.


bullishEUR/GBP extended it's drop to 0.8270 before realizing some support over the previous support level of 0.8252. The slight recovery has take the pair to as high as 0.8319. Some more recovery may take place but 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.


bullishEUR/AUD extended its fall to break below the previous support of 1.5287 to touch 1.5257. This failure of the expected support indicates the possibilities of further consolidation towards the support zone of 1.5163 to 1.5189. However we will wait to see if there is a break below 1.5257 to turn our focus towards 1.5189/1.5163 support. A failure of that support will indicate a near-term topping. 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 some deeper consolidations can not be ruled out.


NeutralUSD/INR jumped up strongly to touch 62.35. Further upward gains cannot be ruled out but the fact remains same that the price-action, as of now, remains in sideways mode between 61.31 and 62.44. 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.

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