EUR/USD: may fill the gap, but risk remains to the downside

EUR/USD Current price: 1.1934


The EUR/USD pair started this 2015 diving down to the 1.2000 mark, as it closed last week a couple pips above the level. Greece continues to be under the spotlight, as the country will hold general elections next Jan. 25th, and the opposing Syriza party is maintaining the lead according to recent polls, weighting on the common currency. During the weekend, news quoting “unidentified government officials in Berlin” hit the wires with headlines saying German’s Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble both view the EZ as capable of surviving a probable Greece’s departure. Europe may cope with a Grexit, but seems the EUR won’t, especially considering market expectations are of a QE announcement on the upcoming ECB meeting, scheduled for Jan 22nd.

The pair falls sharply with the weekly opening, gapping lower to 1.1905 so far and with a strong bearish momentum coming from short term readings, as the 1 hour chart shows the price well below its moving averages, and indicators heading into extreme oversold levels. In the 4 hours chart, indicators turned sharply down with the gap, with RSI hitting 13 at the opening. The pair has little support until the 1.1900 price zone, next huge midterm support. If however the price manages to recover above 1.1955 it may fill the gap, but it will take a strong advance beyond 1.2000, something pretty unlikely now, to deny further falls.

Support levels: 1.1900 1.1865 1.1820

Resistance levels: 1.1955 1.2000 1.2045

EUR/JPY Current price: 143.94

The EUR/JPY cross trades below 144.00, having been as low as 143.60 so far today. The 1 hour chart shows indicators in oversold territory, and the price well below its moving averages, with 100 SMA accelerating below 200 one, holding near its fresh 2-month low, and in risk of further declines. In the 4 hours chart indicators turned south below their midlines, with RSI at 24 and heading lower, all of which supports further declines, particularly with a break below 143.60. The pair left an unfilled gap with the opening, and needs to advance above 144.15 to attempt filling it, advancing up to 144.60 strong static resistance for this Monday.

Support levels: 143.60 143.25 142.70

Resistance levels: 144.15 144.60 145.00

GBP/USD Current price: 1.5256

The Cable sunk to levels not seen since August 2013, down to 1.5323 on the back of worse than expected UK Manufacturing PMI down to 52.5 in December. The UK will have a general election next May and the economy will likely be one of the main battle fields, meaning data will be watched even closer than usual. In the meantime, the GBP/USD has posted a third week in a row to the downside, approaching a long term ascendant trend line coming from 1.3501 January 2009 monthly low, around 1.5200 this week. Opening lower, the 1 hour chart shows that the price struggles around the 1.5250 level after posting a multi month low of 1.5240 so far today, with indicators heading sharply lower below their midlines after the pair left a 25 pips gap. In the 4 hours chart the bearish momentum is also extremely clear, with renewed selling pressure below the 1.5250 level anticipating further intraday declines, but pointing for a test of the 1.5000 figure in the upcoming days.

Support levels: 1.5250 1.5210 1.5170

Resistance levels: 1.5325 1.5370 1.5420

USD/JPY Current price: 120.51

The USD/JPY pair regained the 120.00 level last Friday, recovering from a weekly low of 118.85 posted in ultra thin holiday’s market on Wednesday. Today, Japan markets will open after a five-day holidays in which the USD advanced against most of its rivals and stocks lost ground, meaning things could get interesting across the board, despite no major fundamental readings are scheduled for today. Technically, the 1 hour chart shows the price advancing a few pips above Friday’s close and above its moving averages, as indicators head higher above their midlines. In the 4 hours chart, technical readings present a mild positive tone, as per holding above their midlines yet lacking directional strength. The immediate resistance comes at 120.82, December 23rd daily high, with a break above it opening doors for a retest of 2014 high at 121.84.

Support levels: 120.15 119.90 119.55

Resistance levels: 120.82 121.40 121.85

AUD/USD Current price: 0.8076

The AUD/USD pair started this 2015 establishing a fresh multiyear low, diving down to 0.8077, level not seen since May 2010. During the upcoming hours, Australia will release its AIG Performance of Manufacturing Index, having been its last reading 50.1, barely above the line that separates growth from contraction. If the index falls below the critical mark, the Aussie may come under further pressure during this Monday. Technically, the pair has its next major support at 0.7960 the 61.8% retracement of the 2008/2011 5,000 pips rally, and seems probable the pair will reach that level before market is ready to call for a technical bottom. In the short term, the 1 hour chart shows the pair extended its decline down to 0.8060 at the opening, but almost filled the small opening gap. Nevertheless, technical readings present a clear bearish tone, with indicators heading lower below their midlines and 20 SMA well above current price. In the 4 hours chart momentum heads south below 100 while 20 SMA stands flat around 0.8160, acting as dynamic resistance in case of an intraday  recovery.

Support levels: 0.8060 0.8020 0.7960

Resistance levels: 0.8110 0.8150 0.8200