Forex Abode: January 29, 2014: The FX Daily Dose presents a quick snapshot of the price-action of some of the currency pairs in focus for the immediate and medium-term outlook.
USD/JPY jumped up from 101.76, which was slightly above the expected resistance of 101.62 and that had indicated that the downward consolidation might be over. We had mentioned about this support on January 24, 2014. However, the current resistance is coming at 55-day EMA level and this previous support is acting as resistance now. Considering this the immediate outlook for the short-term is neutral. A decisive break over 103.44 but more specifically 103.85 is crucial to indicate the near-term bottoming. We expect some sideways trading till a break over 103.85 does not take place. There is no change in the longer-term outlook which stays bullish.
Please check the previous update where we had mentioned that EUR/USD's recovery indicates that the pair might have already bottomed up for the short-term and further gains could be expected. The levels where the recent support came favor this outlook. However, after the initial recovery, past 4 day's price-action has been directionless. Some improvement has been there in the daily volatility which had gone down drastically. We still favor further upward movement as long as the price stays over 1.3620/1.3629 support. However, considering the sideways moves, we stay neutral for the short-term. On the upside the resistance at 1.3716 but more importantly 1.3739 are critical. Any break above 1.3749 will indicate that the pair might have really bottomed up for the near-term. Similarly on the downside the support at 1.3581 is critical. Any failure of that support will argue against the above outlook and such a move may take EUR/USD to 1.3520/1.3530 support first and possibly lower.
USD/CAD had broke out of the previous sideways mode and jumped up aggressively. If the support at 1.1119 holds and a break over 1.1180 takes place then further gains, first, towards 1.1230 and then possibly 1.1255 will be expected. Any decisive break below 1.1119 will make the short-term outlook neutral. However, the bearishness in the short-term outlook will only come is the support at 1.1031 fails. Such a move may bring a consolidation towards 1.0960/1.0970. Overall outlook stays bullish for USD/CAD.
CAD/JPY has again entered a sideways mode after a sharp fall. Till there is a breakout from this range, we stay neutral but overall we expect another fall if the resistance at 93.23 holds. A break below the recent 91.85 should target 91.20 support next. We will again expect some sideways moves with that support because the psychological push of approaching 90.00 ranges should start coming into the picture there. However, any decisive failure of 91.19 support will have stronger bearish implications to target 90.44 support next and then possibly a retest of 88.51. If the support holds at 91.85 then on the upside, any failure of 93.23 support should bring further consolidation towards 93.88 first but it may extend as high as 94.20 or more.
GBP/USD should find the first support at 1.6583 even if that support fails, as long as the price action stays above 1.6560, we expect further gains. However a better indication will come if the critical resistance at 1.6625 fails. Till then the short-term outlook stays neutral. On the upside a break over 1.6625 should target 1.6668 next and then possibly 1.6740. However any failure of 1.6561 support will turn the focus for a retest of 1.6535. Any failure of 1.6535 support will indicate the short-term topping to target 1.6475 first and then possibly 1.6420.
EUR/GBP's support at 0.8168 had just represented the psychological support of the approaching 80.00 ranges. Overall outlook for EUR/GBP stays bearish but the immediate outlook is neutral. If the pair breaks over 0.8253 then some more consolidation should come towards 0.8286/0.8306 resistance zone. The recent resistance pattern has been 55-day EMA and on the upside any decisive break over 0.8306 will not only represent the break of the resent resistance but also the break of this pattern. In case such a move takes place then it will indicate a short-term bottoming. However a better indication will only come if 0.8348 resistance fails. With these resistance a break below 0.8209 should extend the fall first to retest the recent 0.8168 and then possibly 0.8120 or more.
EUR/AUD's fall from 1.5832 represents the psychological resistance of approaching 1.6000 level. Such a resistance may extend the downward consolidation further towards 1.5428 or more, if the resistance holds at 1.5737 and any break below 1.5475 takes place. However our immediate outlook is neutral for EUR/AUD though overall we stay positive.
USD/INR fell strongly from 63.49 and the price-action indicates that a short-term bottom may already be in place. However the price-action since October 2013 has been proving that, on the downside, the 60.00 level is acting as a very strong psychological level. The lowest the pair has gone since the fall from 69.52 was 60.54. The next support levels have been above that. We expect some extended sideways moves between the psychological 60.00 and 65.00 level. However the price action has been closer to 60.00 than 65.00 and hence the possibilities of a downward break is more, before another recovery takes place. Our immediate outlook stays neutral for USD/INR.
Check previous entries of FxDailyDose at "Forex Abode".