EUR/USD: Lowest low for the year ahead of ECB

EUR/USD Current price: 1.2302

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The common currency sunk to its lowest level in over two years against the greenback, unable to bounce after reaching 1.2300: general dollar strength and deteriorated European data ahead of key ECB meeting on Thursday were behind the movement. Early Europe, the pair got its first hit in the chin after local Services PMIs edged below expected, suggesting the bloc’s economy remains in contraction mode. Later in the US, employment data failed to surprise, with ADP survey seeing the economy adding just 208K new jobs and wages lag, compared to jobs growth. But ISM non manufacturing PMI printed 59.3 the second best reading in over two years, fueling demand of an already buoyed greenback.

Markets are expected to remain in wait and see mode ahead of ECB meeting, and despite today’s market run, consensus among analysts suggest the Central Bank won’t bring any major new easing in this last meeting of the year. Nevertheless, the dominant bearish trend is undeniable and if somehow the ECB triggers an EUR recovery, investors will likely see it as an opportunity to sell higher.

Technically, the 1 hour chart shows price consolidating below 1.2330, level that capped the upside after disappointing US data, while indicators hold in oversold territory losing early bearish momentum; 20 SMA has extended lower, providing intraday resistance in case of recoveries, while the 4 hours chart shows indicators still biased lower despite RSI stands at 25. Next support area comes at 1.2230/40 where the pair presents multiple weekly and daily lows back to July 2010, with a break below increasing chances of a test of the 1.2000 figure before the year is over.

Support levels: 1.2270 1.2230 1.2190

Resistance levels: 1.2330 1.2360 1.2400

EUR/JPY Current price: 147.41

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Yen self weakness keeps the EUR/JPY cross within the 147.00  range following some rumors coming from Asia suggesting  PM Shinzo Abe’s will end up with a majority in upcoming December 14th lower house elections. The pair traded as low as 147.02 on the day in line with general EUR weakness, breaking a short term ascendant trend line coming from 145.58, November 24th low, but managing to bounce to pullback to it, where it stands ahead of Asian opening. The 1 hour chart shows price below 100 SMA but above 200 one, while indicators stand flat below their midlines. In the 4 hours chart indicators aim higher right below their midlines, whilst price holds above strongly bullish moving averages: the risk to the downside is quite clear now, although a break below 146.80 is now required to confirm further downward momentum in the pair.

Support levels: 147.20 146.80 146.40

Resistance levels: 148.10 148.60 149.15

GBP/USD Current price: 1.5684

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Pound has been the exception confirming the rule when it comes to dollar strength, as Cable closes the day higher, recovering from an intraday low of 1.5618 on the back of improving UK services PMI reading, up to 58.6. Chancellor George Osborne’s announcements in the Autumn Statement however, were not that encouraging, as the government is expected to borrow more money this year than had previously been predicted but also raised its forecast for economic growth from 2.7% to 3.0% for this year, and from 2.3% to 2.4% for 2015. The GBP/USD however was unable to hold above 1.5700 despite an intraday spike up to 1.5718, trading however with a mild positive tone in the short term, as the 1 hour chart shows price steady above a bullish 20 SMA and indicators in positive territory. In the 4 hours chart the technical outlook is still for the most neutral, with price moving back and forth around a flat 20 SMA and indicators around their midlines. The 1.5740/70 price zone continues to be a critical resistance area, and it will take a recovery above it to suggest some interim bottom in the pair and further recoveries, albeit if the year low around 1.5580 gives up, the decline is expected to accelerate to sub 1.55 levels.

Support levels: 1.5650 1.5610 1.5580

Resistance levels: 1.5700 1.5740 1.5770

USD/JPY Current price: 119.83

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USD/JPY’s buyers seem determinate to test 120.00 in the nearest term, with the pair trading roughly 20 pips below the figure. Trading at levels not seen since July 2007, the USD/JPY has advanced alongside with Nikkei this Wednesday, following rumors over the result of upcoming in less than 2 weeks. As for the technical picture, the 1 hour chart shows 100 SMA distancing from 200 one both well below current price, as momentum heads higher above 100 and RSI remains steady at 72, supporting latest advance rather than signaling a continuation at the time being. In the 4 hours chart  indicators maintain the positive ground showing a limited upward strength ahead of Asian opening, yet with price at its daily highs, chances are more of a break higher than of a correction lower. The 120.00 figure can reject price in a first attempt to break above it, yet if price holds above 119.60 immediate support, renewed buying interest may see price breaking higher with no much trouble, eyeing then a continuation towards 120.75 price zone.

Support levels: 119.60 119.25 118.90

Resistance levels: 120.00 120.40 120.75

AUD/USD Current price: 0.8408

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The AUD/USD fell to a fresh 4-year low of 0.8388 early on the day, following local GDP readings: Australia’s economy expanded slower than economists expected in the third quarter, printing 0.3% against the 0.5% previous and the 0.7% expected, underscoring the central bank’s decision to keep interest rates at a record low. Ahead of Trade Balance figures, the pair maintains the bearish bias trading right above the 0.8400 figure and with the 1 hour chart showing price below a bearish 20 SMA and indicators lacking directional strength as per latest intraday upward correction up to 0.8446. In the 4 hours chart indicators maintain a strong bearish momentum, with 20 SMA heading lower above current price, RSI approaching 30 and momentum retracing from 100. Since earlier on the week the RBA left doors open further rate cuts if required, the pair may continue falling moreover on another round of weaker data, eyeing the 0.8300 figure for the upcoming sessions.

Support levels:  0.8385 0.8340 0.8300

Resistance levels: 0.8440 0.8490 0.8535