EUR/USD: failure to hold above 1.1100 puts at risk a bullish continuation

EUR/USD Current price: 1.1072

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The American dollar weakened against most of its major rivals this Thursday, as despite the FOMC upgraded the wording in its statement, it was not enough to convince markets that a rate hike will be delivered this year. The EUR/USD pair surged to its highest in two weeks, printing 1.1119 after London opening, but trimmed most of its daily gains as investors rushed into profit taking on failure to follow through the level.

The macroeconomic calendar was fulfilled with minor data that did little for currencies. In Europe, German and Spanish labor market reports showed improvement, the EU economic indicator for July showed a modest increase, from 104.4 to 104.6, while German inflation ticked modestly higher, up by 0.3% in July, from previous 0.1% and the 0.3% expected. In the US, the number of people who filed for unemployment benefits last week rose from a three-month low, up by 14,000 to 266,000 in the week ended July 22nd, while the Trade balance deficit widened to $63.3B. Things, however, will be far more interesting this Friday, with Q2 GDP readings for the EU and the US, European inflation and German Retail Sales.

The EUR/USD pair settled around 1.1070, back to its post-Brexit comfort zone, and with limited upward scope according to the 4 hours chart, given that the price retreated from a key resistance, a bearish 200 SMA, while in the same chart, the RSI indicator retreated from overbought territory, heading now south within positive levels, as the Momentum indicator also heads lower above its 100 level. An extension below 1.1050 could see the pair extending its decline down to 1.1000, but further slide seem unlikely, unless US data surprise to the upside.

Support levels: 1.1050 1.1000 1.0960

Resistance levels: 1.1120 1.1160 1.1200

EUR/JPY Current price: 116.59

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The Japanese yen strengthened post-FED, helped also by a sharp decline in the Nikkei overnight, and weak US data released at the beginning of the American session. The EUR/JPY pair fell down to 115.80, but recovered ground as Wall Street moved off its daily lows, pushing the yen lower. Ahead of Japanese inflation figures and the BOJ's decision, the pair presents a moderate positive tone in the short term, as  in the 1 hour chart, the technical indicators have bounced from their mid-lines,  and maintain bullish slopes within positive territory while the price held above its 100 SMA and is currently aiming to break above the 200 SMA. In the 4 hours chart technical readings also present a bullish bias, although the price needs to recover above 117.20, the 61.8% retracement of the post-Brexit slump, to be able to extend its recovery this Friday.

Support levels: 116.20 115.80 115.40

Resistance levels: 116.70 117.20 117.55

GBP/USD Current price: 1.3148

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The GBP/USD pair traded as high as 1.3247 at the beginning of the day, but Pound self-weakness has weighed more, with the pair quickly retreating sub-1.3200. Despite US data disappointed, the pair fell to a fresh daily low in the American afternoon of 1.3116, barely recovering from it by the end of the day. There were no macroeconomic news in the UK, although a YouGov survey, suggesting that the UK consumer confidence was at a 6-year low, put additional weigh on the Sterling. From a technical point of view, nothing has changed in the pair: spikes above the 1.3200 level are clearly seen as selling opportunities, although a bearish breakout beyond the 1.3000 figure still seems unlikely ahead of the next BOE meeting. Short term, the risk remains towards the downside, as in the 1 hour chart, the price is well below its 20 SMA, while the technical indicators remain  below their mid-lines, with no upward strength.  In the 4 hours chart, the neutral stance persists, with the price stuck around a horizontal 20 SMA now at 1.3135, and the technical indicators moving back and forth around their mid-lines.

Support levels: 1.3110 1.3065 1.3030  

Resistance levels: 1.3170 1.3220 1.3260

USD/JPY Current price: 105.37

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The USD/JPY pair plummeted to 104.47 on dollar's weakness, but spent the day recovering modestly ahead of Japan's National and Tokyo inflation data, and the BOJ's decision. The pair accelerated higher, breaking through the 105.00 figure late in the US afternoon, on reports suggesting that the Bank of Japan is considering specific easing steps to announced this Friday. Still, the Central Bank has a large history of disappointing markets in their meetings and missing opportunities to act with the right timing, with current yen selling looking a bit too bold, ahead of the event. Japan will also release its June National CPI figures over the upcoming hours, and Tokyo July CPI data alongside with other major macroeconomic readings, promising some action around the JPY crosses for the upcoming Asian session. The short term picture is now bullish, as in the 1 hour chart, the price is currently breaking above its 100 SMA, while the technical indicators head north above their mid-lines. In the 4 hours chart, the price has once again recovered after testing a bullish 100 SMA, while the Momentum indicator heads higher above the 100 level, and the RSI also heads sharply higher around 52, supporting some further gains ahead. Nevertheless, the last word on upcoming yen's direction will come from the BOJ.   

Support levels: 105.05 104.60 104.20

Resistance levels: 105.80 106.25 106.70

AUD/USD Current price: 0.7500

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The AUD/USD pair advanced up to 0.7541 this Thursday, as demand for higher yielding assets re-surged after the FOMC. But the commodity related currency retreated to end the day around the 0.7500 figure, as oil and gold prices edged lower. During the upcoming Asian session, Australia will release its PPI Q2 data, which could give further clues on what's next from the RBA. Given that the early advance remained contained within the early weekly range, chances of a steeper recovery are still low. The short term technical picture favors a bearish extension, as in the 1 hour chart, the price has extended well below its 20 SMA, while the technical indicators maintain their bearish slopes within negative territory. In the 4 hours chart the price is  pressuring its 20 SMA, currently around 0.7490, and the immediate support, while the technical indicators have crossed their mid-lines towards the downside, also supporting a downward continuation towards the critical 0.7450 Fibonacci support.

Support levels: 0.7490 0.7450 0.7410

Resistance levels: 0.7530 0.7580 0.7625