Technical Outlook:
EURUSD: The EUR/USD is currently trading at 1.2667 levels. Euro gave up its early gains after the disappointing comments by the Fed chairman. As the FOMC announced to extend the Operation Twist, but said no to QE3, we could see weakness in all the major counterparts of the US dollar. The European currency is under pressure as the Spain is ready for a bond auction today amid over heated Euro zone debt crisis. Meanwhile, the market participants will be closely watching some of the important data coming from Europe, in the form of French manufacturing and services PMI, German PMI and the current account data. Support is at 1.2410 levels, and the resistance is near 1.2798 (55 day EMA).GBP/USD: GBP is trading at 1.5680 levels against the dollar. The Pound is likely to weaken against its major peers as the BOE minutes showed that the MPC members voted for the additional stimulus measures. The BOE governor said that the Euro zone is posing a greater risk to the UK’s economy and thereby creating a need for more easing. However, the losses in the Pound are likely to be limited as the central banks globally are also looking forward to expand their stimulus measures. Support is near 1.5600 levels, and the resistance is near 1.5785 levels (100 day EMA). The overall bias is bearish for the pair.
USD/JPY: JPY is currently trading at 79.57 levels. The Fed has disappointed everyone except US dollar. The Yen is getting adversely affected by the Fed’s decision to extend the Operation Twist. The yen weakened after the FOMC members decided to keep the interest rates at effectively zero. Japan’s trade deficit widened in the month of May which had already put pressure on the currency. Near term support is at 78.61 levels and the near term resistance is at 80.16 levels. Bullish Target 1-3 moths - 83 levels.
AUD/USD: Australian dollar is trading at 1.0157 levels. The Australian dollar was trading near its strongest level in the last seven weeks, as there is increasing speculation that the central banks globally will add to stimulus measures. The currency got a boost after the Fed assured to take further actions even after extending the Operation Twist. The AUD has gained 1.1% over the last week against US dollar. Near term support is seen at 1.0066 levels (55 day EMA), while immediate resistance is at 1.0247 levels (200 day EMA).
Gold: Gold is trading at $1601 levels. Gold prices have posted the biggest drop in the week after the Federal Reserve ended a policy meeting without launching a third round of quantitative easing to stimulate the U.S. Economy. This decision has boosted the demand for the US dollar, and pressurized the yellow metal prices. Near term support is at $1585 levels, whereas strong resistance can be seen near $1615 levels (55 day EMA on the daily chart). Gold remains bearish as expected internationally in dollar terms.
Oil: WTI Crude is trading at $80.34 levels. The Crude Oil prices continued its losing momentum as data showed that US crude inventories are swelling unexpectedly. Fed’s announcement of extending Operation Twist has put additional pressure on the crude prices. Support is at 79.40 levels and resistance at $84.72 levels (Previous day high on Daily Chart).
DI: Dollar index is trading at 81.49 levels. The US dollar bounced back after the Fed’s decision to postpone the bond buying program and to extend the Operation Twist program by $267b. The original OT program of $400bn will expire this month. Along with this, Fed assured to take further actions needed to promote growth of the economy. The rebound in the US dollar could not sustain for long as the German Chancellor Merkel showed the readiness to use Euro zone rescue funds to buy the bonds of Italy, Spain and other European countries. The movement in the Greenback will be determined by today’s economic data such as Unemployment claims, home sales and Manufacturing Index. Strong near term support can be seen near 80.89 levels and the resistance is at 82.29 (recent high).
