EUR/USD: dollar corrects lower

EUR/USD Current price: 1.2321

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On Monday the dollar gave back some of its latest gains, edging lower against all of its major rivals, but not before pushing many of them to fresh year lows. The EUR/USD pair is included in this last list, having reached 1.2246 before recovering. Early in the European opening, the dollar gathered momentum across the board as weak Chinese exports and imports data weighted on commodity currencies, whilst a worse than expected GDP reading in Japan sent Nikkei markets into the red, boosting JPY. There was no relevant data released in Europe or the US but early in the day, German industrial production grew less than expected in October, another sign of trouble for the Eurozone.

Trading near its daily high of 1.2343, the EUR/USD 1 hour chart shows an increasing bearish momentum in the short term, as per indicators crossing above their midlines and maintaining the bullish slope, while the price advances above a flat 20 SMA. In the 4 hours chart however, the movement remains as corrective, with price stalling its advance around a flat 20 SMA, and indicators right below their midlines. Former lows around 1.2360 come now as immediate resistance, with a recovery above them probably triggering some anticipated profit taking and favoring a continued short term rally up to 1.2440 price zone.

Support levels: 1.2310 1.2270 1.2240

Resistance levels: 1.2360 1.2400 1.2440

EUR/JPY Current price: 148.43

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The EUR/JPY cross traded as low as 148.18 on the back of yen strength, retreating sharply from a fresh 6-year high of 149.67. Stocks edged lower in Europe, while US ones point to close also in the red, keeping the yen on demand. In terms of technical analysis, the 1 hour chart shows indicators managed to correct oversold readings after price bottomed around its 100 SMA, but are now turning again lower in negative territory, as price failed to advance above 148.70 immediate short term resistance. In the 4 hours chart indicators have eased from overbought territory but hold above their midlines so far, with RSI aiming to cross its 50 level to the downside. Renewed selling interest below mentioned low may see the pair extending its decline down towards 147.80 price zone, 200 DMA in the 1 hour chart.

Support levels: 148.20 147.80 147.40

Resistance levels: 148.70 149.25 149.70

GBP/USD Current price: 1.5675

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Cable climbed to a daily high above the 1.5670 by the close of the US session, boosted by dollar weakness and the negative momentum in stocks across the world. There was no data released in the UK, but on Tuesday, the kingdom will release manufacturing and industrial production, usually volatile data that’s expected to have picked up during the last October. In the meantime, the 1 hour chart shows the pair trading around Friday’s opening, with indicators beginning to look exhausted in overbought territory and 20 SMA still heading higher well below current levels around 1.5600. In the 4 hours chart the price extends above a bearish 20 SMA still and momentum indicator is losing its upward slope right below 100, whilst RSI extends above 50. Current upward strength will be challenged by strong selling interest around 1.5740 area if reached, as the pair has failed to extend above it for most of these last month. Anyway, if buyers finally take it over, next probable bullish target stands at 1.5825, last November 27 daily high.

Support levels:  1.5660 1.5620 1.5585

Resistance levels: 1.5700 1.5740 1.5785

USD/JPY Current price: 120.45

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The USD/JPY pair erased all of its post US employment figures gains, reaching a daily low of 120.20 after posting earlier on the day a new 7-year high of 121.84. The second GDP estimate released ended up showing that Japan is not yet out of the recession, as the annualized reading showed a contraction of 1.9%, much worse than initially estimated. Data triggered a bout of profit taking during Asian hours, and slipping stocks later in the day fueled USD/JPY slide. As for the short term technical picture, the pair found short term support in its hourly 100 DMA, the mentioned daily low, while indicators are now slightly bouncing from oversold levels still deep in the red. In the 4 hours chart, momentum heads lower and approaches 100 whilst RSI maintains a strong bearish slope around 55, supporting some further declines ahead. If the mentioned support around 120.20 gives up, the pair can extend its decline by another 100 pips, down to the 1 hour 200 DMA around 119.20

Support levels: 120.20 119.90 119.50

Resistance levels: 121.00 121.40 121.85

AUD/USD Current price: 0.8304

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Aussie joined the club of fresh new year lows against the greenback on Monday, with the pair down to 0.8259 on the back of weak Chinese trade balance data. Despite the headline showed an improved surplus of 53.5B, as both exports and imports missed expectations, boosting chattering about further RRR cuts in China. The bounce from the low has been pretty shallow, as the pair struggles to hold gains above the 0.8300 level. The 1 hour chart shows the price a few pips above a flat 20 SMA whilst momentum heads higher above 100, albeit the lack of follow though in price suggests the upside will remain limited. In the 4 hours chart, 20 SMA maintains a strong bearish slope well above the current price whist indicators maintain the negative bias near oversold levels. There will be no relevant data during the upcoming Asian session, meaning the movements in the pair will likely remain linked to stocks, with little room for a recovery if local share markets replicate their oversea partners’ slide.

Support levels:  0.8290 0.8255 0.8220

Resistance levels: 0.8330 0.8380 0.8415