EUR/USD: FOMC Minutes to make it or break it

EUR/USD Current price: 1.1927

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The EUR/USD closed the day pretty much unchanged, having traded within Monday’s range. The day started with weak fundamental readings in Europe, as Markit Services PMI signaled the common area is unable to pick up pace, sending the pair down below 1.1900. Soft US data did little however to help the greenback, as ISM non manufacturing PMI and Markit Services PMI missed expectations, whilst Factory Orders fell for fourth straight month. But markets have been once again lead by risk sentiment, with Gold and the Yen being the daily winners, and equities and oil once again the losers. On Wednesday, European inflation and FOMC Minutes will gather investors’ attention, with the latest probably being the most relevant as it can offer clues on upcoming US rate hike.

In the meantime, the EUR/USD pair printed a daily low of 1.1883 before recovering, but remained capped but selling interests around 1.1970. The technical outlook continues to favor the downside, as the 1 hour chart shows price struggling around a flat 20 SMA but indicators heading lower in negative territory. In the 4 hours chart indicators had corrected extreme oversold reading but remain deep in negative territory, showing no directional strength at the time being, whilst 20 SMA acts as dynamic resistance currently around the 1.1970 price zone. Risk of further declines will now increase with a break below 1.1865 towards the 1.1800 figure.

Support levels: 1.1900 1.1865 1.1820

Resistance levels: 1.1970 1.2000 1.2045

EUR/JPY Current price: 141.14

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The EUR/JPY trades at fresh 2 months lows, having reached 140.88 intraday on the back of safe havens demand. Falling US yields alongside with stocks slide triggered strong Yen momentum that extends into Asian opening. Technically, the 1 hour chart shows that technical indicators stand in oversold levels, with no aims of changing course, while moving averages extended their decline far above current levels. In the 4 hours chart indicators maintain a strong bearish slope despite RSI stands around 15, supporting further declines. A critical support stands at 140.40 where the pair stalled several times over the last few months, and is also November 2014 monthly low. A break below it should then trigger stops and fuel the slide towards sub 140.00 levels.

Support levels: 140.85 140.40 139.75

Resistance levels: 141.50 142.40 142.60

GBP/USD Current price: 1.5186

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The Cable set a fresh 17-month low of 1.5151 aided by weaker UK data: local Markit Services PMI for December came out at 51.6, the smallest growth in almost two years. Markit PMI reports indicated that Britain’s economy grew 0.5% in the fourth quarter, down from 0.7% in the previous three months. The pair broke below the 1.5200 figure with the news and was unable to regain it, trading in a tight range for most of the US session. From a technical perspective, the pair is closing the day a few pips below the long term ascendant trend line coming from September 2009 low at 1.3501 and while the confirmation did not occurred yet, the risk to the downside has increased exponentially. Shorter term, the 1 hour chart shows that the 20 SMA extended its decline down to the 1.5200 level, reinforcing the strength of the intraday resistance, whilst indicators turned flat well into negative territory after correcting oversold readings. In the 4 hours chart, indicators are showing signs of exhaustion in oversold readings while 20 SMA maintains a strong bearish slope well above current price, all of which continues to favor a break lower.

Support levels: 1.5160 1.5125 1.5080

Resistance levels: 1.5210 1.5250 1.5280

USD/JPY Current price: 118.28

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The USD/JPY pair extended its decline down to 118.05 this Tuesday, as US 10Y yields break through the key 2% level and traded as low as 1.8852% in the day. American indexes nose-diving over 1% daily basis also weighed on the pair, particularly with the S&P trading below the magic 2,000 level.  The decline stalled around the 50% retracement of the latest bullish run measured from 115.55 to 120.82 around 118.15, but the dominant sentiment is quite bearish still. In the 1 hour chart, the price remains near the lows and well below 100 and 200 SMAs, while indicators diverge from each other in negative territory, giving not much clues at the time being. In the 4 hours chart however, indicators maintain a strong bearish slope well into negative territory, suggesting a downward continuation is likely, particularly if the price breaks below the mentioned daily low.

Support levels: 118.05 117.70 117.30

Resistance levels: 118.70 119.10 119.45

AUD/USD Current price: 0.8112

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The Aussie surged to a weekly high against its American rival at 0.8156 this Tuesday, supported by improved commercial deficit in Australia. Gold demand on market run for safety also supported the antipodean currency that held above the 0.8100 mark for most of the last 24 hours. Short term, the pair is losing its upward potential, as the price remains below a bullish 20 SMA whilst indicators aim higher but around their midlines. In the 4 hours chart however, the price is unable to establish above a bearish 20 SMA, whilst momentum retraces from 100 maintaining a bearish bias and supporting further declines. Australia will release its AIG Performance of Manufacturing index in the upcoming Asian session, latest at 43.8, so an uptick in the reading may boost the AUD, at least temporarily, towards the 0.8170 price zone.

Support levels: 0.8105 0.8060 0.8020

Resistance levels: 0.8135 0.8170 0.8210