US Dollar Likely to correct lower
- US dollar looks attractive against the Japanese yen, New Zealand dollar and the Australian dollar in the near term.
- EURUSD - Major resistance seen around the 1.30 level.
- GBPUSD – British pound buyers might be eying 1.6320 in the short term to fill the open gap.
There is a major bullish trend line formed on the hourly timeframe of the EURUSD pair, which is likely to act as a catalyst for the pair in the near term. Currently, the pair is trading around the 23.6% Fibonacci retracement level of the last move higher from the 1.2855 low to 1.2975 high. If the pair moves a bit lower from the current levels, then it might find bids around the 1.2940 area. The mentioned level is a double confluence area of the bullish trend line and 100 hourly moving average.
Intraday Support Level – 1.2920
Intraday Resistance Level – 1.2970
- Overall, the bias can be considered as bullish as long as the pair stays above the mentioned trend line.
- A break above 1.30 might ignite more gains in the short term.
On the other hand. If the pair breaks the highlighted trend line, the Euro sellers could take the EURUSD pair towards the 1.2850 level again. The hourly RSI and MACD are in the positive zone, which might encourage the Euro bulls moving ahead.
The GBPUSD managed to overtake the 1.6200 resistance level recently, but the British pound buyers are struggling to take the pair higher and close the open gap around the 1.6330 level. There is a triangle forming on the hourly chart of the GBPUSD pair, which is on the verge of a break. The most important point to note here is that the 200 hourly moving average is sitting just around the triangle resistance trend line, which might act as a monster resistance in the short term. So, there is a chance that the pair might break the triangle and trade back towards the 100 hourly moving average.
Intraday Support Level – 1.6220
Intraday Resistance Level – 1.6260
- Overall, the bias can be considered as neutral as long as the pair continues to trade inside the highlighted triangle.
- A break above the 1.6280 level might take the pair towards the 1.6330 level.
The hourly RSI is just below the 50 mark, which is not at all a good sign for the British pound bulls. Let us see whether they can manage to hold the 1.6220 support area or not, as a break below the stated level could ignite a fresh bear leg in the near term. The 23.6% fib retracement level of the last move higher from the 1.6051 low to 1.6273 high is also coinciding with the triangle support trend line. So, the British pound buyers might not give up that easily.
There is no economic release lined up in the UK today, so the market might be mostly driven by the sentiment, which is still in favor of the US dollar buyers. However, one cannot deny a short-term correction.
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Simon Furman is one of the best financial analyst with 27 years of trading experience
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