EUR/USD: still bearish, 1.0500 now at sight

EUR/USD Current price: 1.0747

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The American dollar rallied against most of its major rivals this Tuesday, with the EUR/USD pair falling down to 1.0710 before finally bouncing some. Despite tension in the Middle East escalated this Tuesday, Chinese stocks ended the day with quite limited losses, leading to an improved market sentiment. News coming from Europe were pretty disappointing, as an initial estimate shows that the EU annual inflation is expected to be 0.2% in December 2015, stable compared to November 2015, while the core figure is expected to retreat down to 0.8% from the previous 0.9%. The pair traded with a negative tone ahead of the news, accelerating its decline afterwards and breaking through the 1.0800 level. 

Holding near its daily lo, the downward potential is still strong in the short term, as in the 1 hour chart, the price remains well below a bearish 20 SMA, whilst the technical indicators have resumed their declines after correcting extreme oversold readings. In the 4 hours chart, the technical indicators are posting tepid bounces from extreme oversold readings, but the price has declined further below its moving averages. The daily low converges with the 61.8% retracement of the December rally, which means  a break below it is no required to confirm additional declines, eyeing a 100% retracement towards the 1.0500 level later this week. 

Support levels: 1.0710 1.0660 1.0625

Resistance levels: 1.0780 1.0810 1.0845 

EUR/JPY Current price: 127.70

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The Japanese yen held to its recent strength, resulting in an almost 200 pips decline in the EUR/JPY towards levels not seen since mid April this year. The pair has lost over 400 pips during the last three trading days and, despite oversold, there are no technical signs that a bottom has been reached, as the daily chart shows that the technical indicators maintain their sharp bearish slopes, with the RSI indicator heading south around 22. Shorter term, the 1 hour chart shows that the technical indicators have corrected some of their extreme oversold readings before turning back south in extreme territory, while the price continues accelerating further below its 100 and 200 SMAs. In the 4 hours chart, the technical indicators have lost their bearish momentum, but hold well into oversold territory, while the 100 SMA is about to cross below the 200 SMA, both well above the current level, in line with a continued decline.  

Support levels: 127.50 127.15 126.60

Resistance levels: 128.20 128.65 129.10

GBP/USD Current price: 1.4667

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The British Pound extended its decline against the greenback, reaching a fresh 8-month low at 1.4637 during the US session, having barely bounced from the level afterwards. The negative sentiment towards the GBP continues, despite Tuesday data beat expectations as the  UK December construction PMI resulted at 57.8 against the previous 55.3. Anyway, the pair maintains the bearish tone that dominates the pair for over two months already, and will likely continue falling. Technically, the 1 hour chart, shows that the price develops below a bearish 20 SMA, currently around 1.4690, whilst the technical indicators have turned flat well below their mid-lines, following a limited upward corrective move. In the 4 hours chart, the price is also  well below a bearish 20 SMA, although the technical indicators are bouncing from oversold territory, rather following the ongoing bounce in the price than suggesting further gains are under way.  

Support levels: 1.4635 1.4590 1.4550

Resistance levels: 1.4690 1.4725 1.4755 

USD/JPY Current price: 118.92

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The USD/JPY pair corrected higher at the beginning of the day, advancing up to the 119.60 region before selling interest sent it back south. Although the dollar traded broadly higher, the pair closed in the red for a second day in-a-row, having, however, held above Monday's high of 118.69 the immediate support. Heading into the Asian session around the 119.00 level, the bearish bias is still favored as market players are quite sensitive and any spark of risk aversion will automatically send them towards the JPY. From a short term technical perspective,  the downside is also favored, as in the 1 hour chart, the technical indicators have stabilized well below their mid-lines, whilst the moving averages have extended their declines far above the current level. In the 4 hours chart, the technical indicators are turning south after erasing their extreme oversold readings, supporting a downward extension towards 118.00 on a break below 118.70. 

Support levels: 118.70 118.35 118.00

Resistance levels: 119.20 119.60 120.00 

AUD/USD Current price: 0.7147

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The Australian dollar remained under pressure this Tuesday, down to 0.7131 against the greenback, the lowest for the pair since December 18th. The Aussie could not recover from the early week sell-off triggered by speculation of further economic slowdown in China, and is now technically bearish against 0.7240, a strong static resistance level. The country will release its AiG Performance of Services Index for December during the upcoming hours, which latest reading stands at 48.2. If the report results below such level, the AUD/USD will likely extend its decline towards the 0.7100 level, where a daily ascendant trend line should halt the decline. Further falls below this last will confirm a longer term bearish trend and open doors for a retest of the 0.6900 level. In the meantime, the short term picture is bearish as in the 1 hour chart, the price is below a strongly bearish 20 SMA, while the technical indicators are consolidating near oversold territory. In the 4 hours chart, the technical indicators are posting tepid bounces from oversold readings, but are far from suggesting a change in the bearish dominant trend. 

Support levels: 0.7130 0.7100 0.7065

Resistance levels: 0.7205 0.7240 0.7280