The markets continued to trade in a risk off mode with the Euro, Yen and Gold continuing to make steady gains. Yesterday, US inflation data remained weak adding to the woes while the British Pound failed to capitalize on a better than expected unemployment rate. The main events today include the ECB's monetary policy decision and press conference which is likely to see the Central bank lay out the plans for the near term. The Euro is likely to be at risk into the event.
EURUSD Daily Analysis
EURUSD (1.08): EURUSD saw price rejection above 1.094 resistance marking a fourth rejection near this resistance level in the past 12 daily sessions. With prices remaining range bound, a potential for a momentum led breakout is expected sooner. Support at 1.0837 - 1.08 is the key level to watch to the downside while 1.11 resistance could be tested if prices break to the upside. On the 4-hour chart, adjust the falling price channel, we notice EURUSD attempting to break out from the minor rising price channel. The current retest is likely to stall near 1.09 and if successful could see a move lower. In any case, only a break below the support at 1.083 - 1.0823 will confirm a further move lower.
USDJPY Daily Analysis
USDJPY (116.9): USDJPY tested the lows of 116 yesterday as expected. Price action is likely to stay range bound between 118 and 116 with a breakout of any of these levels likely to set the directional bias. On the 4-hour chart, 116.5 remains a key level to watch for. If support is established here, USDJPY could be looking at a potential break higher towards 120.20 level, while if support at 116.5 fails to hold prices, a move lower could be expected. However, with strong rejection candlesticks seen below 116.5 the bias for the moment remains flat unless we see evidence of the support at 116.5 holding for now.
GBPUSD Daily Analysis
GBPUSD (1.41): GBPUSD closed a modestly bullish note yesterday with prices making a lower low. A follow through today with a higher low and a bullish close could potentially signal a move to the upside in the near term while 1.40 remains the next level to watch to the downside. The 4-hour chart remains weak and biased to the downside for the moment. Minor support at 1.42425 is key for now as a close above this level could signal a move higher, while if 1.42425 acts as resistance, GBPUSD could potentially remain weak and biased to the downside.
Gold Daily Analysis
XAUUSD (1102): Gold remains trading below 1093 resistance but price action on the 4-hour chart is showing an inverse head and shoulders pattern with 1093 neckline. A break above 1093 could see Gold rally to as much as 1114 in the medium term. On the daily charts however, price action has closed two straight days with Gold closed on a bullish note yesterday after marking two days of indecision. With the 1093 resistance being broken, Gold prices could be looking to push higher towards 1110 high, tested previously on 7th January this year. However, with price rejection only a few sessions ago, resistance is likely to be established near 1110 - 1115 price zone. Failure to break higher could potentially see Gold prices reverse back to 1093 to establish support following 1080 on a break lower.
