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Mysticforex

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For the past 4 months, sterling has been gradually losing value against the U.S. dollar and earlier this month, the currency pair dropped to fresh 1 year lows. Initially the move was driven by expectations for earlier tightening by the Federal Reserve but the selling gained momentum after weaker UK data raised concerns about the pace of BoE tightening. Last week, the Bank of England lowered their growth and inflation forecasts forcing banks to push out their own timeline for when the MPC will raise rates. Sterling fell as a result but is still holding above its 1 year low. Whether this level is broken could be determined within the next 24 hours with the release of the BoE and FOMC minutes. If the minutes show a more cautious BoE and more optimistic Fed, it would reinforce the divergence in monetary policy direction, sending GBP/USD below 1.5593.

GBPUSD1119140.png.af3053e3f7cbde78f4a708a5b2248fac.png

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Taking a look at the monthly chart of USD/JPY, 120 is not only a psychologically significant level but also the 61.8% Fibonacci retracement of the 1997 to 2011 decline. As a result, it should prove to be a formidable resistance level for the currency pair. While some bulls may wait to take profits closer to that level, pair’s 8% rally in November could encourage others to bank gains earlier. Yet declines in USD/JPY should be limited to 116 and at worse 115 because monetary policy dynamics should keep the currency pair bid.

USDJPY112114.png.11eaabb714b16ececb9cebd9ce4078e1.png

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Euro was decimated today by comments from Mario Draghi who made no bones about the fact that he would like to see more QE in order to stimulate the economy. He also noted that he thinks the currency should weaken. Clearly the ECB wants more action and a lower exchange rate but they are being stymied by the German monetary authorities who oppose most of the accommodation measures. On Monday however the market will get a glimpse at the key IFO sentiment survey and if business confidence in Germany shows serious deterioration, German authorities may become much more amenable to some compromise and the euro could set fresh yearly lows.

 

 

The EUR/USD now finds itself at the last possible support ahead of the key 1.2350 level. A break there wold open up a move to 1.2250 and possibly a fall to key 1.2000 barrier. Only a move above the 1.2600 figure negates the bearish bias.

EURUSD_11_21_14.jpg.f53dbab74f2f3262b764e799bc19f482.jpg

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Techincally AUDJPY pair has turned in a major reversal off the 102.00 level and now targets 100.00 as the near term support. A break there opens up a run to 98.00 while only a close above 102.00 negates the bearish bias.

4.Min__11_26_14..jpg.984c7aa7e8337643adfa887c13d6ff75.jpg

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Taking a look at the monthly chart of USD/CAD if the currency pair breaks its current 5 year high of 1.1467 1.15 will serve as near term resistance but 1.1540, the 38.2% Fibonacci retracement of the 2007 to 2009 rally will be the key level to watch. On the downside, 1.12 remains support for USD/CAD.

USDCAD113014.png.4a596f9f1a6611d7eba15f2adb11a2da.png

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Looking at the techs the 8400 level remains the key support and a break there could open a run towards 8250 over the next several sessions. Meanwhile only a break above 8650 alleviates the bearish bias in the pair.

 

 

The Aussie staged a strong recovery off the recent multi year lows set over the holiday laden week and raced all the way towards 8500 before running out of gas. However, the sharp rebound may be nothing more that a short covering bounce as the fundamentals against the unit remains substantial. The recent drop in iron ore prices to below $60/ton is likely to have a massive negative impact on the AU economy which receives 1 out of 5 export dollars from that sector. If the slump in commodity prices does not correct soon, the RBA may be forced to consider another rate hike in order to ease the economic pain. Tonight's meeting ma be key as the RBA could signal a change of posture from its current neutral stance that could bring another round of selling for the Aussie.

AUDUSD.1_02_14.jpg.14427e6760871df34300679277b49c00.jpg

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Technically the EUR/GBP pair enjoys strong triple bottom support at the 7800 level and a break there opens a move towards 7500. A rejection could take the pair to the top of the range at 8000 but only a close above 8050 removes the bearish bias.

EURGBP.1_03_14.jpg.d23f608287423235d2c5fa8d564cec67.jpg

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Technically the EUR/GBP pair enjoys strong triple bottom support at the 7800 level and a break there opens a move towards 7500. A rejection could take the pair to the top of the range at 8000 but only a close above 8050 removes the bearish bias.

EURGBP.1_03_14.jpg.0738ac1b0dd774076b4602ba33661491.jpg

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Taking a look at the monthly chart of USD/JPY, 120 is an important resistance level not only because of its psychological significance but also because it represents the 61.8% Fibonacci retracement of the 1999 to 2011 decline. If this level is broken, the next area to watch will be 122.20, where the currency pair found resistance in January and February of 2007. Should this turn out to be a failed test for USD/JPY in the near term, the pullback could extend as far as its recent swing low of 117.25

USDJPY120514.png.751c17cd5234f9de220c1e9e2397e10a.png

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Having made fresh lows last week the pair see no real support until the 8100-8000 level and the only reason that it may pause is because it is now grossly oversold. Only a move above 8500 relieves the downside bias

AUDUSD_12_07_14.jpg.984cf177d90853f5e3a87ecf61b3fd77.jpg

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GBP/NZD enjoyed a very strong rally on Monday taking out the key 2.04 level, which was a former support turned resistance. If the currency pair continues to move higher, we should see the rally extend to 2.06. However if the RBNZ fails to lower their inflation forecast, NZD recovers its losses and GBP/NZD falls back below 2.04, a move back to 2.0 becomes likely.

gbpnzd120814.png.9e6494f26549e97d53a2e6050ea7c4a5.png

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NZD/USD now finds itself testing the recent lows at 7650 and a break of 7600 would open a run towards the key 7500 support . The pair has very heavy resistance at the 7900 level and does not break its bearish bias until it can clear that barrier.

NZDUSD_12_09_14.jpg.0b945e5e81775493fbaef3eacb00b913.jpg

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While 1.50 is an important psychological level, taking a look at the monthly chart of EUR/AUD, the 1.5030 level is really key. Smart investors will put their stops slightly above 1.50 and not exactly at that rate so if EUR/AUD clears 1.5030, there is no major resistance until 1.5270, the 38.2% Fibonacci retracement of the 2008 to 2012 decline. If it fails at 1.50, there will be support at 1.4800.

EURAUD121114.png.2518a43a3905c72da6ab1f817068b5ac.png

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The break of the 1.1500 level while important still does not provide clear sailing for the loonie because the pair has a resistance overhead all the way to 1.1700 so progress much beyond this point may be stalled. A break above however would open a run to 1.2000 while only a move below 1.1200 would negate the bullish bias

USDCAD_12_12_14.jpg.adaa51a08d08f51a25a5d351ecae32c0.jpg

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The recent rebound in EUR/USD has taken the currency pair to the top of its month long range. 1.25 is near term resistance with 1.26 being the key level to watch. We do not expect EUR/USD to trade above 1.26. On the downside, a break of the former low of 1.2247 puts the currency on target for a move down to the 50% Fibonacci retracement of the 2000 to 2007 rally near 1.2145.

EURUSD121514.png.38e6b7684c766b085d0ea7558442c644.png

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Taking a look at the daily chart of USD/JPY, if the 115.50 support level breaks, the next target for a decline should be the 100-day SMA right below 112. If 115.50 holds and USD/JPY breaks back above 118, the rally should extend as high as 120, which is not only a psychologically significant level but also the 61.8% Fibonacci retracement of 1998 to 2011 decline.

USDJPY121714.png.e20bba734ab4d1349a1d06a028a71ea2.png

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Techincally the EURUSD looks like it has curved out a strong support bottom near the 1.2250 level, but the base could just be a pause that refreshes in the overall downward draft. So a test of this level could be crucial as a break could open a move towards the 1.2000 figure

EURUSD_12_18_14.jpg.9f0ca72563818386eff3ace3b9542766.jpg

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When it comes to EUR/CHF, the 1.20 peg distorts the effectiveness of technicals. Nonetheless, there are certain levels within the EUR/CHF breakout that is important. EUR/CHF needs to be trading above the December 2nd 1.2047 high to have any chance of extending its gains without intervention. If it drops back towards 1.2020, the 1.20 peg could be tested once again but we do not expect EUR/CHF to drop below 1.1990.

EURCHF121914.png.8c4bafbc195ddd96cc24917f127b247a.png

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In the past 3 decades, AUD/NZD has found buyers between 1.04 and 1.05. The current record low for the pair is 1.0475. If this level is broken, every big round number could be potential support starting at 1.04. Resistance is at 1.06.

AUDNZD122414.png.4d0ec33c31f7b48122888e16a3f7741d.png

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Taking a look at the monthly chart of USD/JPY, the current 5 year high of 121.85 is the main near resistance level for USD/JPY. If and when this level is broken, the next stop for USD/JPY should be the 2007 high of 124.15. Near term support is at 120 but as long as USD/JPY holds above 116, the uptrend is intact.

usdjpy122914.png.f4900aff0f24074d722dd1eaa47f4b51.png

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1.20 is a very important technical and psychological support level for EUR/USD but today’s move has taken euro below 1.2135, the 50% Fibonacci retracement of the rally that lasted from 2000 to 2008. So far, the currency pair has held this level but the support should be temporary. In the short term resistance is at 1.24 but the main resistance level for EUR/USD is 1.26, the November/December range high.

EURUSD123114.png.879e32492a7f3a5186c8a1a8f803ad2a.png

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GBP/USD dropped to a fresh 1 year low on the first official trading day of January. There’s significant downside momentum in the currency pair, which experienced 6 consecutive months of losses. The break below the 23.6% Fibonacci retracement of the 2007 to 2008 decline leaves 1.50 as the next significant support level for GBP/USD. If that gives way, the next point of support will be at 1.48, the 2013 low. If GBP/USD reverses course and starts to recover, it should find resistance above 1.53.

GBPUSD010615.png.1433f3a6e58150d1b85911a30c4fc6bc.png

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USD/JPY has set a lower top at the 120 level and is now looking like its is rolling over on the way to test the support at the 116.00 spike lows. A break of that level would be a major bearish sign while only a close above 120.50 would reestablish a bullish bias.

USDJPY_01_06_15.thumb.jpg.290fe3f80baeffa77f2e8a5a40b5c486.jpg

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