GBP/USD strong resistance lies at 1.2409/43 Commerzbank
According to Karen Jones, Head of FICC Technical Analysis at Commerzbank, Cable’s upside should find strong hurdle in the 1.2409/43 band.“GBP/USD the rebound off to the 61.8% Fibo at 1.1982 has so far been capped by the 55 day ma at 1.2409. This together with the 1.2443 resistance line should halt the rally. While capped here, a negative bias will remain entrenched, this resistance is reinforced by the 100 day ma at 1.2545. We suspect that prices will need to go sub 1.2200/1.2165 however to alleviate immediate upside pressure. We note that the intraday Elliott count is positive and for caution have partially covered shorts”.“Support at 1.1980 guards 1.1775 and then 1.1481 the recent spike low”.
AUD/USD spikes to fresh session peak at 0.7580 level
A fresh wave of greenback selling pressure seems to have emerged during early NA session, with the AUD/USD pair regaining traction to hit a fresh session peak. Currently trading around 0.7575 region, broad based US Dollar weakness helped the pair to extend its near-term recovery back above the very important 200-day SMA. Disappointment from Friday's inaugural speech by the US President Donald Trump triggered a sharp slide in the US treasury bond yields and continues to benefit higher-yielding currencies - like the Aussie, lifting the pair back closer to over two-month tops touched last week on Friday. Meanwhile, subdued performance in the commodity space, with copper giving up majority of its daily gains, has failed to lend any additional support. In absence of any fresh fundamental drivers, in-terms of any economic releases, the US Dollar price-dynamics remains the exclusive driver of the pair's movement on Monday. From current levels, 0.7600 handle is likely to act as immediate resistance above which the pair is likely to aim towards 0.7645-50 hurdle with 0.7615-20 region acting as intermediate resistance. On the flip side, 0.7555-50 area now becomes immediate support to defend, which if broken would accelerate the slide towards 0.7520-15 support (Friday's low), en-route 200-day SMA support near 0.7500 psychological mark.
The EUR/USD pair maintained its bearish trading bias on Tuesday and is currently trading closer to the lower end of daily trading range, around 1.0740-45 region.Today's mixed Euro-zone PMI readings failed to impress bulls and assist the pair to build on to its recent leg of up-move from 50-day SMA support. Moreover, a broad based greenback recovery, led by a sharp rebound in the US treasury bond yields, also collaborated to the pair's corrective move from the highest level since early December. In fact, the key US Dollar Index has managed to stage a goodish recovery from 7-week lows, despite of Trump’s Treasury Secretary pick Steven Mnuchin warning on strong dollar. The greenback, however, struggled to extend recovery move amid growing concerns over the US President Donald Trump's protectionist stance and uncertainty surrounding his fiscal stimulus policies. Next on tap would be the release of flash manufacturing PMI and existing home sales data from the US, which would be looked upon for some short-term trading opportunities. Immediate support is pegged near 1.0715-10 region below which the pair is likely to immediately slide to 1.0680-75 horizontal support, en-route 1.0625 intermediate level and 50-day SMA strong support near 1.0590-85 region.On the upside, sustained move above 1.0765 level should assist the pair to build on to its recovery momentum and lift it beyond 1.0800 handle, towards testing its next major hurdle near 1.0820 level ahead of 100-day SMA strong resistance near 1.0840-45 region.
The pound gained momentum in the market during the last hours and climbed across the board. GBP/USD broke above 1.2600 and reached 1.2616, the strongest level since December 14. The pair then pulled back toward the 1.2600 area, where is currently trading, up 0.80% for the day. Cable is rising for the fourth time out of the last five trading days. Today the British government announced that on Thursday will present the legislation regarding the Article 50, that the Parliament will have to approve (after yesterday’s Supreme Court ruling). If it passes the Parliament, the government would be able to invoke Article 50, triggering Brexit formal negotiations, that is expected to take 2 years. UK government to publish Article 50 legislation on Thursday - Reuters. To the upside, resistance levels might be located at 1.2630/35, 1.2730/35 (Dec 13 & 14 high) and 1.2775 (Dec 6 high). On the flip side, support could be seen at 1.2550 (American session low / 20-hour moving average), 1.2485/90 (daily low) and 1.2415 (Jan 17 high / Jan 24 low).
GBP/USD tumbles to lows near 1.2580 The Sterling is now suffering the pick up in the demand of the greenback, dragging GBP/USD to fresh daily lows in the 1.2585/80 band.The pair shed around a cent after climbing as high as the 1.2680 area in early trade following the renewed buying interest surrounding the buck during in the European afternoon.GBP met increasing selling pressure and prompted the ongoing correction lower in spot despite preliminary GDP figures for the fourth quarter have come in above expectations, showing the economy is now seen expanding at an annualized 2.2% and 0.6% QoQ. Despite the leg lower, the pair stays on its way to close its second consecutive session with gains, including fresh 6-week tops at today’s peak in the 1.2670/75 band.Later in the session, USD will take centre stage in light of the releases of US Initial Claims, Trade Balance figures, New Home Sales and Markit’s Services PMI.As of writing the pair is losing 0.39% at 1.2586 and a breakdown of 1.2507 (100-day sma) would open the door to 1.2488 (low Jan.25) and finally 1.2420 (55-day sma). On the other side, the next hurdle aligns at 1.2673 (high Jan.26) followed by 1.2729 (high Dec.13) and then 1.2776 (high Dec.6).
GBP/USD potential for further downside - Commerzbank
In view of Karen Jones, Head of FICC Technical Analysis, Cable could see a deeper retracement, likely to hold in the 1.2515/1.2420 region.“GBP/USD had a 13 count on the 240 minute chart yesterday and today we have one on the daily for caution we are exiting our longs as the risk is that we will see a deeper sell off. Dips lower are indicated to hold circa 1.2515/1.2420. Currently we remain unable to rule out further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will struggle here”. “The market is bid above the 55 day ma at 1.2417 and the near term risk remains on the topside. We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low”.
GBP/USD poised for further decline near term Commerzbank
In view of Karen Jones, Head of FICC Technical Analysis at Commerzbank, Cable could see its sell off extended in the short term.“GBP/USD last week we charted a TD perfected set up on the daily chart and the near term risk is that we will see a deeper sell off. Dips lower are indicated to hold circa 1.2420/1.2340. Currently we remain unable to rule out further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will struggle here”.“The market is bid above the 55 day ma at 1.2418 and the near term risk remains on the topside. We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low”.
The softer tone in the greenback has now picked up extra pace, lifting EUR/USD to fresh daily highs near 1.0760.The pair is testing the upper end of the recent range in the mid-1.0700s bolstered by the broad-based selling bias around the buck.In addition, auspicious results from the euro area showed higher-than-expected inflation figures for the current month, while the bloc is seen expanding more than estimated in Q4 and the unemployment ticked lower in December, all adding to the stronger EUR.Furthermore, EUR remains supported by speculative positioning, as net shorts have been trimmed to levels last seen in late May during the week ended on January 24, as per the latest CFTC report.Data wise in the US economy, Q4 Employment Cost Index is due, seconded by the S&P Case-Shiller Index, Chicago PMI and Consumer Confidence measured by the Conference Board.The pair is now gaining 0.61% at 1.0760 facing the next up barrier at 1.0775 (high Jan.24) ahead of 1.0798 (high Dec.5) and then 1.0820 (50% Fibo of the November-January drop). On the other hand, a breakdown of 1.0650 (20-day sma) would target 1.0617 (low Jan.30) en route to 1.0589 (55-day sma).
Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted the pair remains under pressure and a test of 111.98 cannot be ruled out.“USD/JPY is under pressure and capable of retesteting the 38.2% retracement at 111.98 area and the 112.02 April high. This is stronger support and we note that the recent move lower continues to indicate that this is the end of the corrective move. As a consequence is side lined very near term and we suspect will again attempt to recover. Initial resistance lies at 115.34 (imoku 2) and this will need to be regained in order to alleviate downside pressure and reintroduce scope to key short term resistance offered by the 16 month resistance line at 118.21”.“Only below 111.98 would trigger losses to the base of the cloud, which lies at 109.92 and, if seen, we look for this to hold (this is also the 50% retracement of the move up from November)”.
Karen Jones, Head of FICC Technical Analysis at Commerzbank, noted Cable could slip back towards the 1.2430 region.“GBP/USD is interesting it has actually been contained in a channel since October and yesterday we rejected by the top of that channel at 1.2712. To complicate matters further we note the divergence of the daily RSI and the two combined suggest a spell of weakness. We would allow for a slide back to the 55 day ma at 1.2428 and potentially 1.2253 the 18th January low”.“We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low”.“Above 1.2712 would allow for further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will struggle here”.
In light of the recent price action, Cable’s bias remains on the negative side, suggested Karen Jones, Head of FICC Technical Analysis at Commerzbank.“GBP/USD last week was rejected by the top of a channel at 1.2710. We also saw a divergence of the daily RSI and the market has eased back to the 55 and 100 day moving averages at 1.2427/60. We will need for these to be eroded for potential to the 1.2253 the 18th January low. Our bias is negative”.“We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure. Support at 1.2250 guards the 1.1988/80 recent low”.“Above 1.2710 would allow for further strength to the 1.2776 December high. Between here and 1.2836 lies several Fibonacci retracements and major resistance and we suspect that it will struggle here”.
EUR/USD has quickly dropped to fresh daily lows in the 1.0660 area in response to an acceleration in the demand for the US Dollar.Spot has come under renewed and strong selling pressure early in Europe today, breaking below the short-term support line and the Fibo retracement around the 1.0700 handle.The greenback has intensified its correction higher following last week’s sharp sell-off, prompting the ongoing correction in the risk-associated space and eyeing the critical 101.00 barrier when gauged by the US Dollar Index (DXY).EUR is adding to yesterday’s losses, always with the USD-dynamics as the exclusive driver of the price action although Monday’s speech by President Draghi sounded somewhat more dovish than expected. Draghi reiterated that the Governing Council is ready to increase the current QE programme both in size and duration, while he once again talked down the recent pick up in inflation figures, saying it was largely driven by energy prices.Data wise in Euroland, German Industrial Production has contracted at a monthly 3.0% during December, reverting the previous 0.5% expansion. Across the pond, December’s Trade Balance figures are due seconded by JOLTs Job Openings.EUR/USD levels to watchThe pair is now losing 0.72% at 1.0671 and a break below 1.0617 (low Jan.30) would target 1.0601 (55-day sma) en route to 1.0566 (23.6% Fibo of November-January decline). On the upside, the initial hurdle sits at 1.0745 (high Feb.7) followed by 1.0781 (100-day sma) and finally 1.0829 (high Feb.2).
Karen Jones, Head of FICC Technical Analysis at Commerzbank, remains cautious on Cable, adding that the bias stays neutral to negative.“GBP/USD yesterday eroded its 55 day ma but no close was seen below here it lies at 1.2429. Yesterday’s price action was a minor reversal and caution is warranted. The market last week was rejected by the top of a channel at 1.2702. A close below the 55 day ma will introduce potential to the 1.2253 the 18th January low. Our bias is neutral to negative”. “We suspect that prices will need to go sub 1.2250 in order to alleviate immediate upside pressure and trigger losses to the 1.1988/80 recent low”.
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