Technical Outlook of Major Currencies

Technical Outlook of Major Currencies

Ahead of a two-day FOMC meeting starting today, a deal to avert US military strike on Syria and Larry Summers’ withdrawal from the race to be head of the Federal Reserve dragged the US Dollar lower against most major currencies. Wednesday’s FOMC announcement on whether to start tapering or not is likely to be the primary driver for the currency market. Also read: US Fed Takes The Center Stage – Weekly Outlook

Here is a brief technical outlook on how important major currency pairs could possibly react to the critical Fed tapering decision.

EURUSD

• EURUSD currency pair, failed to sustain at higher levels and gave up some of its early Monday gap-up opening gains to settle for the day at 1.3337, registering only marginal gains.
• As is visible on daily chart, 1.3390 – 1.3400 zone on the upside marks a strong resistance zone for the currency pair. Should the pair now manage to decisively clear the 1.3400 barrier, it seems to continue appreciating in the near-term towards its 2013 highs with intermediate psychological resistance at 1.3500 and 1.3600 round figure levels.
• Meanwhile, on the downside, 1.3320 – 1.3300 zone is likely to provide immediate support for the currency pair. Should the pair dip below its immediate support, it could then be vulnerable to test 1.3200 strong support area on the downside.

GBPUSD

• On Monday, GBPUSD currency pair touched a near eight-month high of 1.5962 before giving-up most of its gains to settle for the day just below the 1.5900 mark at 1.5898 from 1.5873 previous week’s close. This 1.5960 – 1.5980 zone on the upside now seems to act as immediate hurdle for the currency pair. A decisive break above the immediate resistance zone could easily lead to further strengthening of the currency pair towards 1.6050 – 1.6060 resistance zone, marked by the upper trend-line resistance of an ascending channel formation on daily chart.
• On the downside, 1.5830 – 1.5810 zone now seems to protect immediate downside for the currency pair. Should the pair break below 1.5830 – 1.5810 immediate support, it seems to continue the pull-back towards 1.5720 – 1.5710 zone, which seems to have emerged as a very strong near-term support for the currency pair. Further, failure to hold 1.5700 strong support area, would signal break-down from the ascending channel formation on daily chart and the pair might witness additional weakness in the near-term.

USDJPY

• On Monday, USDJPY currency pair witnessed fourth consecutive day of losses, correcting by over 2% from 100.58 high touched last Wednesday to yesterday’s low of 98.45. The pair, however, managed to hold the 98.90 – 98.70 zone, previous resistance now turned support, (representing 100-day SMA and 50% Fibonacci Retracement Level of 103.73 – 93.78 downfall) and might continue to act as a major downside support for the currency pair. Should the pair decisively break and close below its major support near 98.90 – 98.70 zone, the pair is likely to give up its recent gains and move back towards 97.50 support area, consisting of 38.2% retracement level and 200-day SMA.
• On the upside, 99.90 – 100.00 resistance zone might continue to act as immediate cap for the currency pair. Should the pair now manage to decisively strength back above 100.00 resistance, the pair is likely to continue the up-ward momentum initially towards 101.50, July 2013 highs. Further a decisive move above July highs would indicate continuation of strong momentum and the pair might appreciate beyond 2013 highs and test 105.00 levels in the near-future.

• Original Article: Admiral Markets and hyper link Admiral Markets with http://www.admiralmarkets.com/