Chart of the Day

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Cable has been in a funk lately as the slowdown in UK housing sector has dampened the expectations that the BOE will move on rates anytime before 2015. The UK economy continues to perform well, recording the best growth rates in the G7 universe but appetite for cable amongst traders has clearly declined as sentiment turns more cautious. Tonight UK will deliver its most important PMI readings of the month as the service sector reports its numbers. A strong reading could revive enthusiasm towards sterling, and at very least keep it steady. Meanwhile better news about the US economy and the possibility that ISM Services data could be strong as well could help fuel a move higher is USD/JPY which will help push GBP/JPY above 172.00

 

 

Technicals

Technically GBP/JPY remains in relatively tight 170.00-172.00 range but the pair looks ready to break to the upside and a move through the 172.00 figure opens the prospect of a run all the way to 174.00 figure over the next few days.

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From a fundamental and technical basis, it should only be a matter of time before EUR/JPY breaks above 140. Considering that the currency pair ended Friday’s session only 10 pips or so away from this level it won’t take a stretch of the imagination to believe that at bare minimum a test and most likely a break of this level will occur. However it is not just the proximity of this level that has us convinced that the currency pair will not only breach 140 but make a run for 141. First and foremost, EUR/JPY is traditionally the quintessential risk on trade, which means that when stocks do well, EUR/JPY should rally. However even though U.S. stocks have climbed to record highs, we have seen a very limited up move in EUR/JPY and a lot of that had to do with ECB uncertainty. Now that euro has survived negative rates, EUR/JPY should be able to trade higher. At the same time, Friday’s non-farm payrolls report supported the recent gains in USD/JPY.

 

 

Technicals

Taking a look at the daily chart of EUR/JPY, the currency pair has been in turn mode since the end of last month and with the latest rally, it has now entered the Buy Zone according to our Double Bollinger Bands. A break of 140 would take the currency pair well above the 38.2% Fibonacci retracement of the December to February decline and psychologically significant resistance level. If that occurs, there’s no major resistance until 141. However if EUR/JPY fails at current levels, a drop back down to its 3 month low of 138 becomes likely.

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Since the beginning of the month, EUR/GBP has been on a one-way downtrend and with the currency pair seeing lower highs and lower lows, all signs point to further losses. On a fundamental basis, EUR/GBP should be trading lower. The ECB eased monetary policy while the BoE is very comfortable with its policy. The currency pair dropped to a fresh low today despite relatively healthy industrial production numbers. The big test for pound this week will be tomorrow’s employment report. For the most part, the labor market is expected to remain unchanged with jobless claims falling at a consistent pace. However based on the latest PMI numbers, we believe that the risk is to the upside, meaning EUR/GBP weakness. The service sector reported the strongest pace of employment growth in 17 years and in the manufacturing sector, jobs continue to be added. Stronger data could send sterling to new highs versus the euro.

 

 

Technicals

With EUR/GBP trading at 16-month lows, we have to turn to the weekly chart for support. The 23.6% Fibonacci retracement of the 2011 to 2012 decline sits right at the 2010 swing low at 0.8070. If EUR/GBP breaks through this level, there is no major support until 80 cents and even this level could give way as more significant support sits at 0.7750. As for resistance, rallies should be limited to 0.8265 for the time being.

[Mysticforex 13]

The kiwi/yen pair is the quintessential carry trade candidate in the forex market as the spread differential between the two currencies in expected to expand. Yet the pair has been in a slow drift downward and may now tip below the 86.00 level. The key reason is concern by the market that the RBNZ may choose to temper its tightening policy given the slowdown in demand for the country's prime export - milk. With New Zealand economy showing some signs of exhaustion of growth the monetary authorities in New Zealand may choose to halt the rate hike cycle for now. Meanwhile the yen has been surprisingly strong as US yields remain contained and some risk aversion sentiment is starting to creep in to the market. Tonight's RBNZ decision may be the key to the pair path for the near term. If the central bank sounds dovish the pair could tumble through the 86.00 level in a flash.

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Taking a look at the weekly chart of EUR/NZD, the latest decline has taken the currency pair below the 61.8% Fibonacci retracement of the 2012 to 2013 rally. While 1.55 could serve as psychological resistance, the more significant technical resistance is at 1.5450, a level that the currency pair bottomed at in December 2012 and again in March 2013. Below that is the November swing low at 1.5393. Resistance is up at 1.5850.

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Technically the 7950 level remains key support in EUR/GBP and a break there could open a run towards the 7800 figure. On the upside a retake of 8000 could signal a spike bottom and a possible move back to 8100.

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Taking a look at the daily chart of AUD/NZD, the latest decline has taken the currency pair below the 38.2% Fibonacci retracement of the January to June rally. The next level of support is at 1.0767 and if this level along with the swing low of 1.0750 is broken, there is no support until 1.07. If AUD/NZD rallies break back above 1.0835, there is a chance of a stronger recovery up to the February high of 1.0945.

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When you’ve got a central bank artificially intervening in the currency market, technical levels carry less significance. As shown in the daily chart of EUR/CHF, the currency pair is trading between a number of key Fibonacci retracement levels but the main levels to watch are the March 3rd low of 1.2105 and the April high of 1.2250. We don’t expect EUR/CHF to break either one of these levels in the short to medium term.

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EUR/CAD

 

From a technical perspective, the next wave in EUR/CAD’s downtrend has already begun with the break of the 200-day SMA at 1.4735. The currency pair has been hovering around this moving average for the past week and finally broke through it with Friday’s reports. There has also been a major head and shoulders pattern forming that broke earlier this month but the move did not really gain momentum. Now that the 200-day SMA has broken, we believe it creates a major downside opportunity. There is no support at this stage until the 2014 low near 1.4400 and more significantly the 38.2% Fibonnaci retracement of the August 2012 to March 2014 rally at 1.4230. The downtrend would be negated if EUR/CAD rises back above 1.48.

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EUR/GBP has found strong support in front of 7950 and that remains the key level in the pair. A break below opens up a run towards .7800 while only a break above the .8100 figure relives the bearish bias.

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The drop in GBP/JPY suggests that the pair has put in a double top at the 174.00 level and may correct all the way to 170.00 over the next several weeks. The pair has some support at 172.00 but a break there could open a deeper test of 170.00. Meanwhile only a break above 175.00 negates the bearish bias in the pair.

[Mysticforex 13]

All of the highs in EUR/JPY over the past 2 weeks have remained below moving average and trendline support, which is a sign that the breakdown remains intact. However in order for EUR/JPY to make a run for its 2014 low, it needs to break below 137.70. As long as it holds above this price point, consolidation is more likely.

[Mysticforex 13]

USD/CAD is approaching the key support level at 1.0600 and a break there could push the pair to a test of the 1.0500 level. A hold however could spur a short covering rally back to 1.0800.

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Today’s break above the key 1.7063 resistance level in GBP/USD is significant because it takes the currency pair clearly above the 1.7044/49 resistance level that marked the high in 2009 and the low in 2005. The risk of a rise to 1.7332, the 50% Fibonnaci retracement of the 2007 to 2008 decline has increased materially as a result and only a break below 1.6950 would mitigate that possibility.

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Technically, the 100.75 barrier remains a key support for the pair and the longer the base holds the more likely the pair is to break to the upside as foundation holds. A break below the 100.75 level however opens the possibility of a run through 100 while a take out of 102.00 creates a much more bullish bias in the pair.

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Technically GBP/AUD has hit a clear resistance ahead of the 1.8400 level and is in the process of establishing a double top. A move through 1.8400 would re-instate the upward trend while a move below 1.8000 would suggest that a much deeper correction is in store.

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Taking a look at the weekly chart of EUR/NZD, the next level of support for the currency pair is 1.5393. If this level is broken, then there is no major support until the 2013 low of 1.5082. The downtrend in EUR/NZD remains intact as long as the currency pair holds above its former breakdown level of 1.5707.

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Not my analysis. Not even a chart. A friend sent me this, have yet to evaluate it.

[Mysticforex 13]

Having now taken out 9450 level NZD/CAD looks ready to mount a run towards 9500. A break there opens the field for a test of the yearly highs, but a break below 9400 would suggest that the upside bias has been broken

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From a technical perspective, 1.35 is less significant than the February 3rd low of 1.3477. However taking a look at the chart, today’s decline has taken EUR/USD below trend line support. If the pair breaks its 2014 low of 1.3477, the next stop could be the November low of 1.3295. However if it holds 1.3450 (we’ll give it a bit of flexibility), it could be back into the 1.35 to 1.37 range for the pair.

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For the past week the EUR/CAD has been trading in a 1.4600-1.4400 range and the lower end of that range is the key support. A break there could open the run towards 1.4000 as the pair heads for fresh yearly lows

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Taking a look at the weekly chart of EUR/AUD, if the 2014 low of 1.4360 is broken, the next level of support for the currency pair will be 1.4230, the 38.2% Fibonacci retracement of the 2012 to 2014 rally. If EUR/AUD finds support above 1.4360, it should remain confined between 1.4360 and 1.4600. If 1.46 is broken, there is no major resistance until 1.4850.

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Technically GBP/NZD is nearing the top of its multi-month range with 1.9750 looking to cap the current move. A break higher could open a run to 1.9900 while a drop would target the lower end of the range as 1.9400

[Mysticforex 13]

Taking a look at the weekly chart of EUR/GBP, the currency pair is clearly in a downtrend. If the 2014 low of 0.7889 is broken in a meaningful way, there is no support until the July 2012 low of 0.7756. A break above 0.8033 would be needed to negate the downtrend and put EUR/GBP in a better positioned for a trend reversal.

[Mysticforex 13]

Having broken below the 1.4300 level and made fresh yearly lows, the EUR/AUD pair is clearly in a steep downtrend. The next target for the shorts is the 1.4000 figure while only a close above 1.4500 relieves downward pressure