EUR/USD end of correction?
The single currency rebounded from an 11-year low against the dollar the previous week as investors looked ahead to Non-farm Payrolls report due on Friday, which could shed some light on the pace of the U.S. recovery. Payrolls are estimated to rise by 242k in March from 295k in February, while the unemployment rate is forecast to have remained unchanged at 5.5%. If we get a figure above 200k, this could have a potentially bullish effect on the dollar and it would mark the 14th consecutive month of job gains which exceeds the 200k.
Bearing the above in mind, if the bears manage to maintain the price below the 200-period SMA and the psychological level of 1.1000, the next target for the pair would be the 1.0600 level. Furthermore, if the sellers manage to win the battle then we could see further pressure on the key support level of 1.0460. If not, then the short-term traders should watch for a failure swing pattern, prompting a more aggressive move towards the 1.1100 region. The MACD supports this notion, with the indicator trending modestly lower below it signal line while the RSI indicator is getting weaker below 50 levels and may lead the pair towards 1.0600 once again.
GBP/USD stands still above 1.4800
Over the last couple of weeks, the GBP/USD pair has established and traded within a trading range roughly around the key level of 1.4900, whilst moving down to support at 1.4800 and up to 1.5000. Over the last couple of days, the pound has moved very strongly pushing through resistance levels at 1.4700 and more recently at 1.4900. However, the rate seems to struggle near the psychological level of 1.5000, providing indications that the bulls are not strong enough to overcome that hurdle.
Several days ago it rallied again, trying to break through the 1.5000 level before dropping back to a support level at 1.4700. The latter level is very significant as the bulls managed to sustain the price and also to push it above the 50-period SMA on the 4-hour chart, which now finds support from it near the 1.4850 region. A break above the strong resistance level of 1.4990 could change the negative picture to positive, prompting a move back towards the 1.5150 region, where the 200-period SMA is ready to provide a significant resistance to the bulls. On the other hand, if we fail to see a break above the 1.4990 hurdle, then I would expect the price to move further down towards the 1.4700 – 1.4725 zone.
USD/JPY could extend gains soon!
This week’s correction did not come as a surprise, following the aggressive rally in the USD/JPY pair, which saw it break many significant levels including the 120.85 level and more recently the 119.30 level. The latter is a big resistance level for the pair and a break of this should prompt a significant move higher, with the initial target being the 120.15 level, which coincides with both, the 50- and the 200-period SMAs on the 4-hour chart. The pair rose for a second day retreating from a monthly low, with the bulls finding temporary support from the 118.40 level, which includes the lower boundary of the sloping channel. The MACD lies above its trigger line, confirming the recent bullish momentum, while RSI escaped from its oversold areas and moved higher near 50.
One the other hand, if we fail to see a close above the key resistance level of 119.30, it could prompt a rally in the JPY this week, with the next support zone coming at 118.20 – 118.40, a strong technical and psychological zone.
AUD/USD bulls could take the lead above 0.7900
The strength seen in the Australian dollar during the last couple of months against the US dollar, which held it above the key support level of 0.7560, has suggested some signs of a recovery and thus the 0.7900 – 0.7940 zone will be a significant one for the AUD bulls this week. In addition, it’s remarkable that the MACD indicator for the first time since the AUD/USD pair broke the psychological level of 0.9200, back in September 2014, is moving slightly in a bullish territory.
The daily chart shows the pair has been in a clear downtrend since June 2014. After the pair tested 0.7650, it made several attempts to break higher, but the move was halted by the aforementioned resistance zone, slightly above the descending trend line, which started back in September 2014.
Technical studies support a further rise, since the MACD is moving above both, its trigger and zero lines while the RSI is moving upwards after finding strong support near the 30 level. It is very important to see a move above the 0.7900 – 0.7940 zone to confirm that the downtrend came to an end. Fail to reach that level then it is expected the pair to come back and retest once more the 0.7640 level.
XAU/USD on possible correction
The yellow metal moved aggressively lower the last couple of days after finding a strong resistance around the $1,224 level, which coincides with the 50% Fibonacci retracement level. From thereon, the price came all the way down breaking below the 38.2% Fibo level as well as below the psychological level of $1,200. Currently, the precious metal is trading near the $1,190 level. This level is significant as it includes the 50-period SMA and the 200-period SMA on the 4-hour chart.
Bearing the above in mind, if we see a break below the key support level of $1,190 then we could see a bigger retracement, following two consecutive winning weeks, prompting a more aggressive move towards the $1,180 level, which includes the 23.6% Fibo level.
On the other hand, if we do see a pullback in the metal in the coming days, which I do not foresee, resistance should be found around $1,212. However, for confirmation of the trend reversal, we will need to see a 4-hour close above the key resistance level of $1,246 which includes the golden ratio of 61.8%.
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