Major Currency Pairs Technical Update

On Thursday, the US Dollar strengthened against most major currencies on the back of stronger-than-expected June employment reports. In the process, the US Dollar wiped off most of its losses against EUR, JPY, AUD, CHF and NZD, but against GBP continued to remain weak on weekly basis.

Given the backdrop, here is technical update on some important major currency pairs - EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD and NZDUSD

EURUSD

The pair reversed from 1.3700 handle and dropped back below 1.3600 mark, giving up most of its gains registered in the previous week. This 1.3600 level now seems to act as important Pivot Point for the upcoming week. Should the pair gives a weekly close below 1.3600 mark it seems more likely to continue weakening in the upcoming week and drift lower to test a very important support near 1.3500-1.3480 zone, confluence of 50% Fib. retracement level and an ascending trend-line support. The ascending trend-line also seems to constitute towards formation of a bearish chart pattern, Rising Wedge, on daily chart. Alternatively, a move above 1.3600 might continue to confront resistance near 1.3640 and 1.3700 levels. Only a move above 1.3700 mark could possibly negate any short-term bearish outlook for the pair and the pair then could easily climb back to 1.3800-1.3820 resistance area, representing 61.8% Fib. retracement level.

GBPUSD

Although the pair is heading for a fifth week of consecutive gains, it seems to be reversing from the upper trend-line resistance of a short-term ascending trend-channel formation (in Red). Also, daily and weekly RSI (both above 70) are suggesting near-term overbought conditions and hence, the current ongoing profit taking move is expected to continue and the pair could possibly drop to 1.7060-50 horizontal support area. However, a weekly close above 1.7160 level would indicate continuation of the pair's recent strong move and the pair could easily surpass 1.7200 round figure mark and continue appreciating towards 1.7400 area, representing another trend-line resistance of a medium-term ascending trend-channel formation (in Green).

USDCHF

The pair rebounded sharply from 0.8850 important support level, also nearing 100-day SMA support, and move back towards 200-day SMA resistance near 0.8950 area. This 200-day SMA region now seems to act as decisive level for the near-term direction of the pair. Should the pair manage to hold on to its gains or provide a weekly close near 200-day SMA, it is likely to extend its strong move even beyond a very important psychological resistance near 0.9000 mark. A move above 0.9000 mark could further trigger accelerated up-move for the pair, even beyond 0.9100 level, towards 0.9140 area. Meanwhile, a reversal from 200-day SMA and a drop back below 0.8900 immediate support seems to infuse additional near-term weakness for the pair towards 0.8750 support zone. Recent low of 0.8850 could possibly act as intermediate support on the downside.

USDJPY

Although, the pair rebounded from 101.20 intermediate support, it continues to face strong resistance near 200-day SMA, currently near 102.20. Formation of a descending triangle on daily charts suggest that any up-move beyond 102.20 resistance is likely to be capped near a very important resistance near 102.70-80 zone, representing the descending trend-line of the descending triangular formation. The pair seems more likely to start drifting lower and test the horizontal line support of the descending triangle formation, near 100.80 level. Furthermore, a break below this horizontal line support is likely to confirm continuation of the near-term downtrend towards testing sub-100.00 psychological level.

AUDUSD

The pair failed to capitalize on its move above April 2014 high and reversed from an intermediate resistance near 0.9510-30 zone. The pair dropped back to re-test a very important support near 0.9330 region. A drop below this strong support area would make the pair vulnerable to further corrective move in the upcoming week towards 0.9210-0.9200 support area, 50% Fib. retracement level. However, should the pair manage to hold this strong support and witness a rebound, it could possibly extend the rebound even beyond 0.9500 mark touched on Wednesday and continue the short-term up-ward trajectory till 0.9600 level.

NZDUSD

The pair is reversing from its weekly resistance level near 0.8800 level marked by the upper trend-line resistance of an ascending channel formation on weekly chart. This corrective move is likely to continue during the upcoming week initially towards 0.8640 support area. Even a decisive move above 0.8800 resistance is likely to be capped at 0.8840 resistance level, comprising of 61.8% Fib. expansion level and highs touched in July 2011. Only a break above this strong resistance would warrant further near-term up-move for the pair.

Haresh Menghani
Senior Market Analyst
Admiral Markets