EUR/USD: Draghi hits the EUR, but caution prevails

EUR/USD Current price: 1.1259

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The financial world kept spinning around the upcoming Brexit referendum next Thursday, with mixed results coming from polls marginally favoring the "remain" side, and keeping risk sentiment on.  Generally speaking, high yielders end up gaining against the greenback, while safe-haven assets fell, although the EUR/USD pair plummeted to 1.1242, and remains nearby at the end of the day,  finally filling the weekly opening gap.  On two separated events, Central Banks' heads, Draghi from the ECB and Yellen from the FED, gave testimony of the  ongoing monetary policies before parliamentary commissions, offering cautious approaches ahead of the UK referendum. 

Federal Reserve Chair Janet Yellen noted that the economy has picked up during the second quarter of the year, adding that low interest rates and job gains will likely support consumer spending. Draghi, on the other hand, said that the economy is expected to proceed at a moderate but steady pace, but added that inflation is expected to hover at low levels, and therefore “further stimulus is in the pipeline,” this last triggering EUR's decline. 

Trading a few pips above the mentioned daily low, the 4 hours chart for the EUR/USD pair shows that the technical indicators have pared losses around their mid-lines, indicating the downward potential is still limited, despite the intraday decline. In the same chart, the price is currently below a bullish 20 SMA, which converges with the 38.2% retracement of the May's decline, acting as immediate resistance around 1.1295. The pair will probably continue trading on sentiment rather than technical studies as the key UK date looms, with investors probably turning more cautious this Wednesday and keeping most major assets range bound.  

Support levels: 1.1245 1.1210 1.1160

Resistance levels: 1.1295 1.1330 1.1365 

EUR/JPY Current price: 117.89

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The EUR/JPY pair advanced modestly this Tuesday, but failed to sustain gains on EUR's weakness, barely trading 40 pips above its daily opening by the end of the day. The Japanese yen eased against most of its major rivals as risk sentiment kept improving, helping the pair reach a daily high of 118.68, before Draghi's comments put the common currency in selling mode. Despite closing in the green, the pair has posted a lower low and a lower high daily basis, in line with the dominant bearish trend. Intraday, the 4 hours chart presents a limited upward potential, as the technical indicators have bounced from near their mid-lines, heading north. but below previous highs, whilst the price remains well below a bearish 100 SMA, around 120.20. The weekly high stands at 119.13, and only a clear advance beyond it could favor additional advances towards the 120.00 region.  

Support levels: 117.60 117.05 116.65 

Resistance levels: 118.30 118.70 119.20

GBP/USD Current price: 1.4669

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The GBP/USD pair rallied up to 1.4783, it's higher since early January, and stalling not far from the year high set at 1.4815. The pair however, trimmed all of its daily gains to close it pretty much flat around 1.4670, as market's enthusiasm over a Bremain faded on new mixed polls, showing that both sides of the campaign remain neck-to-neck. Also, seems possible that the market has decided that it has been enough of pricing in a positive outcome. Anyway, the pair added advanced roughly 800 pips in less than a week, more than a good reason to correct lower.  Daily basis, the pair has managed to post a higher high and a higher low, leaving the technical outlook on the bullish side. In the 4 hours chart however, the technical indicators are correcting the extreme overbought readings reached earlier this week, although further slides are not confirmed, given that the RSI indicator turned flat around 68 whilst the Momentum indicator holds far above its 100 level, and the 20 SMA has continued advancing below the current level, now approaching the 1.4500 figure. Despite market is turning cautious, more wild spikes either side of the board can't be disregarded, ahead of the referendum. 

Support levels: 1.4685 1.4650 1.4620 

Resistance levels: 1.4745 1.4790 1.4815

USD/JPY Current price: 104.78

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The Japanese yen edged lower against most of its major rivals, driven by easing concerns over a possible Brexit, and some comments from Japanese Finance Minster Aso, who said that there is no plan to react immediately should the JPY appreciate sharply on a Brexit. The pair advanced up to the higher end of its weekly range, although is still unable to advance beyond the critical 105.00 figure. Somehow, the bearish dominant trend seems to have found an interim bottom, as the price recovered from a daily low set at 103.57, a couple of pips above the multi-year low set earlier this month, establish therefore, a double bottom, quite clear in the daily chart. The neckline of the figure is the weekly high, set at 104.84, with a break above it suggesting a 130 pips recovery. Nevertheless and with the Brexit referendum in the way, seems a too risky play. Technical readings in the 4 hours chart favors additional recoveries, given that indicators are heading modestly higher within positive territory, although the 100 SMA has extended further its decline, now around 106.80. Should the advance extend, 105.50 is the key level to break to confirm a steeper recovery over the upcoming sessions. 

Support levels: 104.65 104.20 103.70 

Resistance levels: 104.85 105.20 105.40

AUD/USD Current price: 0.7470

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The AUD/USD pair rallied up to 0.7512, underpinned by rising stocks, and the latest RBA Minutes, showing that the Central Banks is in no rush to cut rates further, as the economy is still in the growing path, and while still an issue,  inflation will likely return to the bank's target over time.  The pair retreated early US session on broad dollar's demand, also weighed by falling gold prices, as the commodity shed around $20.00, but met buying interest on approaches to the 0.7450 level, the 38.2% retracement of this year's rally, holding on to gains at the end of the day, and maintaining its bullish tone. In the 4 hours chart, the technical indicators have resumed their advances within positive territory and after correcting overbought readings, whilst the 20 SMA heads sharply higher below the current level, now around 0.7430. Above the mentioned daily high, the rally can extend up to 0.7540, a strong static resistance level, with an advance beyond this last pointing for a steeper recovery up to 0.7834, this year's high.

Support levels: 0.7450 0.7410 0.7370 

Resistance levels: 0.7510 0.7540 0.7580