USD/JPY Up on hawikish FOMC, but will bulls dare to get out of the prevailing downtrend

Since January 8th the USD/JPY pair entered into steep downtrend channel, which came in continuation of the bearish signals from early November. This week the bears are taking break and stopped to rest around 108.30 level, a significant support area. Of course having the development of the channel, a test of the lows around 108.30 – 108.00 could not be avoided. 

But today the fundamental environment comes into play with last Janet Yellen’s speech at FOMC. As it was expected the interests rates remain unchanged and Fed left open door for hikes in March. The outcome for the pair is somehow mixed, but we can not ignore that bulls moved towards 109.00 handle. Тhe agenda now is whether the bulls will dare to escape the shackles of the descending channel.

NZD/USD Shooting star and RSI divergence to define next move

Since late November 2017 the New Zealand Dollar is trying to fight against the US dollar. It’s a hard game to play. The NZD/USD pair touched its highest level since then at 0.7436, having formed a double top with the September 20 top.  Meanwhile as seen on the daily chart the New Zealand Dollar’s upwards march is hindered fundamentally by disappointing CPI figures and technically by the formed Shooting Star candlestick. Adding to this picture the RSI divergence comparing to the uptrend line staring from late December 2017.  

The pair is facing support at the 61.8% Fibonacci retracement of latest August to November down slope at 0.7260, which in case of breaking would open doors for testing the 50% Fibo of same decline at 0.7165.   

During the past weeks we witness some signs of strength towards the upside, but yet remain difficult to catch. The immediate movement of the pair is yet confined by higher highs and lows, which do not exclude a sideways consolidation. So entering short is not a good option right now having the expectations for another bulls’ intervention.

AUD/USD The battle for 0.81 continues with busy Wednesday

Aussie lost ground during last sessions but is trying to recover. Nevertheless the battle for the 0.81 area remains in force. Today the AUD/USD pair marked daily high at 0.8113 but eased with US opening and currently is trading at 0.8084.The slide from the top took place amid the renewed rally of the greenback and the falling prices of oil and gold.

Technically speaking the short term outlook remains neutral. On the four hour time frame the price is moving above its 100-day and 200-day SMAs, while the 20-day one keeps flat around 0.8083 and the bulls fail to conquer it. RSI is located around its mid-line with lack of directional strength. Stochastic is showing bearish momentum with current location at 43. 

To add some gains the AUD/USD pair should first break the 0.8135 level in order to generate power to test the 0.8200 handle.

The upcoming Asian session will bring Australia’a December inflation figures which may push Aussie higher in case they come above expected. From the US side we’ll have President Trump’s speech, the ADP private employment report is due and then the Federal Reserve will announce its decisions. So busy Wednesday ahead and it’ll be interesting to observe the pair’s movement. 

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EUR/USD Surged higher despite Draghi’s attempts to talk down the euro

The most important macro event this week brought nothing new, as Mario & Co left the monetary policy unchanged as it was expected. Mr Draghi pointed out that recent and increased volatility in the forex market is source of uncertainty, with little chances for interest rate hike this year. However this event resulted very positive to the EUR/USD and the pair surpassed the 1.25 handle for first time since mid December 2014. In fact Draghi’s attempts to talk down the single currency failed as its strength now is die to the solid domestic economic and the broad US Dollar’s weakness.  

EUR/USD extended  its impressive rally that started in January 2018 and today marked daily high at 1.2537 but pulled back to currently trade at 1.2482. The short term outlook for the pair remains bullish and a close above 1.25 would open doors for testing the 1.2540 – 1.2550 region.

GBP/JPY Within uptrend channel

The broad US Dollar’ weakness has fuelled the Sterling and today continues to move steeply upwards and marks new post Brexit highs. GBP/USD is seen firmly above 1.40 and bulls are preparing to conquer the 1.44 level. Sterling’s strength mirrors the GBP/JPY pair, which is also enjoys uptrend.
Since late August 2017 the GBP/JPY pair has been developing within ascending channel with upper side formed by the highs in late October and early November. As seen on the daily chart the highs seen in late September and early October give some false signs from the uptrend channel viewpoint, but it provides other options for validation up and down to make it appropriate despite them.
Currently the pair is located in the middle of the channel and it seems that feels very comfortable over there and is not planning to abandon it soon. RSI and stochastic remains within positive territory but are staring to lose upward strength and that suggest bulls to pause and take deep breath before next upleg. So the pair might meet support around 153.50 – 153.40. Looking to the upside I expect during next sessions test of 159.90 – Brexit level and upper side of the channel.

 

Cable cracked 1.40, but consolidation is expected before next upleg

Early in the day Cable broke the 1.40 handle and even succeeded to mark daily high at 1.4026. A pullback followed but currently the price is not far from the psychological level at 1.40.

On the four hour time frame the price continues to develop above its bullish SMAs and today’s lowest level found support at the 20-day SMA. Indicators on the same chart are yet located within positive territory, but are losing upward strength. Today’s rally is impressive as GBP/USD reached June 23 in 2016, the time of Brexit decision, but more important for the continuation of the bullish trend is a close above 1.40. I think that the bulls will take a breath before tackling higher challenges, so in the short term the Cable will be seen in consolidation mode. 

USD/JPY Close to critical support after dovish BoJ

The Bank of Japan's monetary policy meeting held earlier today delivered relatively dovish massage, as central bankers left unchanged the interest rates and its QQE purchase. Following the speech of Governor Kuroda the USD/JPY spiked the 111.00 level but found resistance at 111.20. On the four hour time frame the price is developing below its bearish SMAs, while RSI and stochastic turned sharply to south and are showing strong bearish momentum. The pair failed to hold gains are is close to the key support at 110.50. The only interesting about this pair today will be whether will test the next support level at 110.19 (the 4-month low marked last week). 

 

USD/CHF Fresh montly low with RSI divergence

The notable US dollar’s weakness drove the USD/CHF pair under huge selling pressure today and the pair pinned a fresh four month low at 0.9535. Earlier in the day the pair tested the support at 0.9550 that was last visited in September 2017 and bears were seduced by lower levels from late 2016.

What comes to be more interesting is that while the bears entertained around the daily low, the RSI was marking higher lows. The RSI divergence is clearly seen on the four hour time frame at the time the price was marking lower lows. The pair retreated later to higher levels with current market price 0.9622, but we should be cautious with this quick bullish reversal as the 0.9665 resistance (double top earlier this week) comes into play. 

Gold Back above $1335

Gold jumped above $1335 today following the weakened US dollar amid growing woes on possible US government shutdown. During last three sessions the XAU/USD was trading lower but the downside movement was limited by the support line at $1325. Bulls quited this correction area to resume the up-move towards the 4-month high, that was marked at the beginning of the week. But to get back there, first should conquer the resistance at $1344, then the doors are opened for the $1350 area. On the flip side $1333-32 region supports the immediate downside (flat 20da- SMA), which if broken might drag the XAU/USD pair back around $1325. In the short term this scenario is not favored given the indicators on the four hour time frame supporting the uptrend.

AUD/USD Bulls on pause mode under 0.80 barrier

Since the beginning of the week the AUD/USD pair has been trading in narrow range, close to the recently marked high and suggesting continuation of the the bullish trend.Today the Aussie received a goodish boost by better than expected figures from Australian macro data while the greenback is losing strength. 
The AUD/USD topped at 0.7998 during the early trading hours but failed to crack once again the psychological barrier at 0.8000. The pair retreated to reach daily low at 0.7940 but found support at the 20-day SMA and bounced from this level to currently is trading at 0.7968.
On the four hour time frame the price is developing above its bullish moving averages. Stochastic retreated from its overbought readings and is showing bearish momentum, while RSI is located at 60 and is acting quite undecided, which suggests that bulls prefer to consolidate before next attempt to conquer the 0.8000 level.  

USD/CAD Looking for direction ahead of BoC

USD/CAD pair has lost directional strength and is seen in narrow trading range today slighty above the 1.24 mark. It seems that market participants are not likely to take part ahead of Wednesday's BoC monetary policy decision. The 85% probability per Bloomberg for rates hike will boost the CAD’s strength but in case BoC postpone hikes for the next meeting the USD/CAD would be poised to test the resistance provided by the 38.2% Fibo retracement of latest bullish run at 1.2585. Lookind to the downside first support is seen at the psychological barrier at  1.24, below which the pair might extend its downward slope towards the 61.8% Fibo of same retracement at 1.2385.  

 

GBP/USD is gaining momentum

GBP/USD is moving steeply upwards and today marked fresh new high, that has not been seen since June 2016 and even reached the Brexit referendum levels. However the pair retreated from the 1.3822 to currently trade at 1.3795. 

Technically speaking the short term outlook for GBP/USD remains neutral to bullish. On the four hour time frame the price is developing well above its moving averages, all keeping bullish slopes. RSI is located within extreme overbought territory, but has eased around 82 level. The Momentum retreated modestly from its north areas, but when the pair is challenged to test again the daily high, a correction is out of the question at this stage. 

First resistance is provided by 1.3835 (February 2016 low) and in case bulls conquer it, doors are opened for testing the psychological 1.4000 handle.

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United we stay stronge Vs The triumph of a corrupt country

While I was surfing on the forex markets my senses shifted to the live-going ceremony for the commencement of the Bulgarian Presidency of the Council of the European Union.

In fact I am extremely puzzled how this has started at all, having nine protest in Sofia today, blocked city centre and several bomb threats at the airport. Adding to this picture the extremely brutal murders with vague sequel that happened last days. Too much rebels were about to kill the enthusiasm of the 201∞  for some other Bulgarians. And yes, 8 is replaced with the symbol for infinity because our corrupt politicians think that some six months can make them gods and take advantage of endless wealth on account of the EU.

Back to the ceremony……Donald Tusk broke the boring and put-up atmosphere on this meant to be a classic ceremony. His 5 minutes speech was in fluent Bulgarian and admirations! He showed an extremely good knowledge of our history, poets, even quoted the great author Ivan Vazov, whose name is standing at the National Theatre where the ceremony took place. I learned something new - a Bulgarian actor took place on Game of Thrones. Mr Tusk, the real game of thrones is happening right here, right now. 

The beat goes on with better than expected speech of Juncker who honestly shared that he was is in a quite good mood in 2007 when he supported the accession of Bulgaria to the European Union. Well it seems now he is not sorry for this, because likes too much the Bulgarian shopska salad and some other culinary delights. 

While he shared his admirations to the mystery of Bulgarian voices  which sound the Cosmos, lots of Bulgarians believe that their voices now should be heard. 

All of Europe is aware of the fact that the most corrupt country takes over the presidency of the EU. What our PM said is that without the Lord we can not do anything. Well his Lord is the EU investments and development programs that support the underworld.

Music plays, fireworks explode and shimmers. The only thing I could say now is: Happy people bee(r) united! Nevertheless how you feel and in what reality you live!

And the most proper anthem now is not the Ode to joy, but Wake me up (when it is all over). 

* United we stay strong is the slogan for the presidency and the Bulgarian Parliament, which is quite irrelevant. By my opinion. 

USD/CAD Could surge higher

The grennback’s strength is vanishing and today is down against its major rivals. Meanwhile it has still outperformed the Canadian dollar. The USD/CAD pair is moving higher this week and as seen on the four hour time frame tested the resistance provided by the 50% Fibonacci retracement of latest bullish run at 1.2485. The price is now developing between turning to the upside 20-day SMA and yet bearish 100-day and 200-day SMAs. Stochastic is located within extreme overbought area, but yet is aiming north. RSI is seen slightly above its mid-line and has lost directional strength. 

Adding to this picture the failure of Loonie to track the surging oil prices, the conclusion comes to unsustainable belief on oil’s further rally. And in this case the USD/CAD pair is quite undecided and hesitant. 

Technically speaking the pair should break to above the 1.2050 – 1.2515 resistance area in order to bring back bulls in the game.

  

EUR/USD Bears are aiming 1.1875

EUR/USD dropped today and marked a two week low at 1.1915, a level that has not been visited since late December and down with 0.30% for the day.

The greenback’s rally is shuffling now. The strength given by Fed's speakers yesterday do not weight today as softer than expected macro data put an halt on US dollar’s demand.

EUR/USD was pressured by the initial support provided by th 50% Fibonacci retracement of last week’s bullish run at 1.1903. As seen on the four hour time frame the pair bounced of this support and is currently trading at 1.1933. However on the same chart the 20-day SMA has turned sharply to south and the price is developing well below it. RSI and stochastic are located within extreme oversold territories and both have lost directional strength.  

Additional declines are expected toward the 61.8% retracement of same rally (1.1875) in case the pair returns back to 50% Fibo, coinciding with the 100-day SMA .

GOLD Correction to reinforce bulls

Spot Gold started the new week in smooth mood, having quite tight daily range. The US dollar surprised markets with strength after poor US jobs data, released last Friday that was not affected by the expected rate hikes approaching this year.

As seen on the four hour time frame, the XAU/USD pair is developing well above its bullish moving averages. RSI and stochastic got out of their extreme overbought areas and had lost directional strength, but yet remain on higher levels. Given all above it seems that this corrective phase is going to call back the bulls. The precious metals stands above the 23.6% Fibonacci retracement of latest upleg (at $1305) and the initial support at $1313 (Friday’s low) is untouched by the bears. A deeper correction  might follow only in case of testing the 38.2% of same Fibo at $1292, but not lower. 

USD/CAD dropped to fresh multi-month lows

USD/CAD plummeted today and dropped to lowest level since late September 2017. The pair was set on huge selling pressure, with over 150 pips down for the day, after the disappointing NFP data form US, while in Canada the unemployment rate dropped to 5.7%.

Technically speaking, the short term outlook for the pair remain neutral to bearish. On the four hour time frame the price is moving well below its bearish moving averages. RSI and stochastic are located within extreme oversold areas, with the first starting to retreat and the second has lost directional strength. As seen on the same chart, after marking the multi months low at 1.2351 the pair found support at the 61.8% Fibo of latest September to November bullish run.This is very significant level and in case of breaking it to below, the pair will be poised to extend its decline towards the psychological 1.2300 handle. During the upcoming sessions we may expect a corrective phase, before USD/CAD takes new direction. 

  

Gold is rising

After the corrective slide yesterday, Gold is again up today and gains traction above $1318. The US dollar was set on pressure and is trading lower for second time during last three sessions despite the upbeat employment figures. Market players stayed indifferent on yesterday’s FOMC meeting minutes, for as much as March 2018 rate hike odds have hovered around 70% for the last month. Against this background the demand for the precious metal is rising.

Technically speaking the short term outlook remains bullish. On the four hour time frame the price is moving above all its moving averages,that are keeping north direction. RSI and stochastic are showing strong bullish momentum, both above their mid-lines. 

The first challenge for XAU/USD is seen at $1321(January 2nd’s high) and next one is the $1334 level, which will open doors for testing the September 5 top at $1344. On the flip slide caution comes with the psychological $1300 mark.