Technical Outlook of Major Currency Pairs

With no signs of a deal over the US budget stand-off, leading to government shutdown, and raising the debt ceiling by Oct. 17 to avert a historic default, the US Dollar Index (I.USDX), that measures US Dollar’s performance against six other major currencies, remained weak in the week gone-by and posted fourth consecutive week of losses. On Monday, the US Dollar started the week on back foot as the US government shutdown stretched into its seventh day.

Here is a technical outlook for some important major currency pairs and how they are likely to move in the week-ahead.

EURUSD

• Last week EURUSD currency pair climbed to 1.3646, 2013 closing high, before settling for the week below the 1.3600 mark. On Monday, the pair continued trading with marginal gains from previous weeks closing of 1.3570.
• From current levels, 1.3470 – 1.3450 zone on the downside, last week’s low also representing 50% Fibonacci Retracement Level of May 2011 to July 2012 downfall, seems to provide immediate support for the currency pair and could act as an important pivot for the up-coming week. Should the pair drops below its immediate support, it seems to give-up some of its recent gains and witness a corrective pull-back towards 1.3330 – 1.3310 zone representing the lower trend-line of the ascending channel formation on daily chart.
• On the upside, 1.3650 – 1.3680 zone, coinciding with 2013 closing high, seems to provide some resistance for the currency pair. A decisive move above 1.3650 – 1.3680 resistance zone would suggest further up-move for the currency pair towards 1.3800 resistance zone, marked by 61.8% retracement level. The 2013 high of 1.3710, also coinciding with the upper trend-line of the ascending channel might act as intermediate resistance for the currency pair.

 

USDJPY

 

• Last week, USDJPY currency pair settled below its  200-day SMA for the first time in the calendar year 2013. Since then, the pair has failed to register any remarkable recovery and on Monday, the pair decisively weakened below 97.20 – 97.00 multiple support zone, consisting of 50% Fibonacci Retracement Level of Feb. to May 2013 up-move and an ascending trend-line extending from Feb. 2013 low through June & August 2013 lows. Failure to hold 97.20 – 97.00 multiple support zone probably indicates underlying weakness for the currency pair and the pair now seems vulnerable to test Aug. 2013 lows, 96.00 – 95.80 support zone also representing 61.8% retracement level. Further, a decisive weakness below Aug. 2013 lows would possibly add to the near-term downward pressure for the currency pair towards 94.00 levels.
• On the upside, 97.00 – 97.20 zone, previous important support zone, now seems to provide immediate resistance for the currency pair. Any up-move beyond the immediate resistance zone now seems to be capped at 98.00 – 98.50 zone, comprising of 200-day SMA and 100-day SMA respectively.

 

 

GBPUSD

 

• As is visible from the chart, last week GBPUSD currency pair retraced from a nine-month high of 1.6260 marked by 1.6250 – 1.6270 resistance zone, consisting of 2013 closing high also coinciding with the upper trend-line of an descending channel formation on weekly chart and is now likely to act as important resistance for the currency pair.
• Should the pair manage to clear this strong resistance near 1.6250 – 1.6270 area, it is likely to continue appreciating towards 1.6380 – 1.6400 resistance zone, resembling the intraday high touched in 2013 also coinciding with 38.2% Fibonacci Retracement Level of the pairs 2007 – 2009 big downfall. Intermediate resistance on the upside is seen near 1.6130 – 1.6140 zone.
• Alternatively, a decisive break below 1.5950 representing the lower trend-line of an ascending channel formation on daily chart, would probably suggest break-down from the ascending channel and the pair could immediately test sub 1.5900 level. (1.5880 level). The pair, then, could be vulnerable to further downside towards its next important support near 1.5720 – 1.5700 zone representing 38.2% Fibonacci Retracement Level of 1.4812 – 1.6260 recent up-move.
• Considering the pair’s recent move, investors are likely to wait for a break on either side before deciding on the near-term direction of the currency pair. Till then the pair seems to trade in a 300-pips range between 1.5950 on the downside and 1.6250 on the upside.

 

 

AUDUSD

 

• Last week, AUDUSD currency pair provided a weekly close above 0.9400 for the first time since mid-June this year, recovering from sub 0.9300 levels tested in the previous week. The pair had retraced from a three-month high of 0.9528, touched on Sept. 18 following the FOMC announcement to continue with its bond-purchases worth $85 billion per month.
• The 0.9500 area on the upside, marked by 38.2% Fibonacci Retracement Level of 1.0582 – 0.8845 downfall, might continue to act as important resistance for the currency pair. Should the pair manage to decisively clear this important resistance near 0.9500 area, it is likely to continue appreciating further towards 0.9680 – 0.9700 area, representing 200-day SMA and 50% retracement level respectively.
• On the downside, 0.9320 – 0.9300 seems to protect immediate downside for the currency pair. Should the pair fail to hold this immediate support, it is likely to drift lower towards 0.9230 – 0.9210 zone, that seems to have emerged as a major downside support for the currency pair consisting of 23.6% retracement level and 100-day SMA.

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