EUR/USD: US inflation surprises to the upside

EUR/USD Current Price: 1.1085

The dollar traded slightly higher after the European opening, but sentiment continued seesawing within appetite and aversion, with no certain winner during the first half of the day. Asian shares plummeted, dragging down European equities, although the decline in these last has been so far moderated. Early data released in Europe showed that in Germany, the index of producer prices for industrial products fell by 2.4% compared with the corresponding month of the preceding year, and by 0.7% compared to December 2015. Anyway, investors held their breath ahead of the release of the US inflation figures for January, which resulted better than expected, triggering a round of dollar's buying. Core inflation yearly basis rose 2.2%, above market's expectations of 2.1%, while monthly basis, it advanced 0.3%.

The EUR/USD extended its decline towards its weekly low, and seems ready to continue falling, given that in the 1 hour chart, the technical indicators are gaining bearish strength within negative territory, as the price develops below its 20 SMA. In the 4 hours chart, the bearish tone is even more clear, with the pair also being capped by a bearish 20 SMA and the technical indicators accelerating their declines towards their mid-lines.

Support levels: 1.1045 1.1000 1.0960

Resistance levels: 1.1120 1.1160 1.1200

GBP/USD Current price: 1.4253

View Live Chart for the GBP/USD

The GBP/USD pair plummeted in spite of positive UK data. According to official data retail sales in January surged by 5.2% compared to a year before, and 2.3% monthly basis. Previous month readings suffered downward revisions, probably the main reason why the pair was unable to rally. Following the release of US inflation figures, the pair fell to a fresh daily low, and the 1 hour chart shows that the 20 SMA has turned sharply lower well above the current level, while the technical indicators maintain sharp bearish slopes within negative territory, supporting further declines for today. In the 4 hours chart, the 20 SMA continues leading the way lower, attracting sellers on approaches to it, while the Momentum indicator hovers around its mid-line, lacking clear directional strength, and the RSI indicator heads lower around 36. A break below 1.4234, the weekly low, should see the pair extending towards the 1.4100 region, should dollar's strength prevails.

Support levels: 1.4234 1.4190 1.4155

Resistance levels: 1.4290 1.4330 1.4370

USD/JPY Current price: 113.15

View Live Chart for the USD/JPY

Limited upward potential. The USD/JPY fell down to 112.70 at the beginning of the day, with the yen strengthening amid resurging risk aversion. The pair hovered around the 113.00 for most of the European morning, and positive US inflation data is doing little for the pair, given that it barely advance 20 pips after the release of strong figures. The pair may advance further, but there are no technical signs that the movement will be firm, given that in the 1 hour chart, the price remains well below its moving averages, while the technical indicators aim higher, but still below their mid-lines. In the 4 hours chart, the technical indicators also aim higher below their mid-lines, but the price is still far below their mid-lines. The pair needs at least to advance beyond 113.70, to have a more constructive outlook at least in the short term.

Support levels: 112.90 112.50 112.10

Resistance levels: 113.35 113.70 114.00

AUD/USD Current price: 0.7089

View Live Chart for the AUD/USD

The AUD/USD pair is pressuring its weekly low around the 0.7080 region, as broad dollar's strength weighs. The risk is towards the downside, with the 20 SMA heading south well above their mid-lines, whilst the technical indicators have turned south near oversold levels. In the 4 hours chart, the technical indicators head south slightly below their mid-lines, as the price battles to extend below its 200 EMA, which may open doors for a sharper decline during the upcoming week.

Support levels: 0.7070 0.7025 0.6980

Resistance levels: 0.7110 0.7145 0.7190

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