EUR/USD: downward pressure increases ahead of FOMC

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0510

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The greenback is strong ahead of FOMC Minutes, particularly against its European rivals and with the clear exception of the Japanese yen. The Euro is among the weakest, as political woes undermine demand for the common currency, regardless of positive data coming from the region. Released at the beginning of the London session, the German IFO survey showed that business sentiment improved in February, rising up to 111.00 from previous 109.8. Also, the final revisions of EU January inflation matched initial estimates, down in the month by 0.8% and up by 1.8% when compared to a year earlier.

The EUR/USD pair traded as low as 1.0493, with the following bounce contained by selling interest around 1.0520, and the short term technical picture maintains the risk towards the downside, given that the price is below a bearish 20 SMA, whilst technical indicators have resumed their declines after correcting oversold conditions. In the 4 hours chart, the 20 SMA has turned sharply lower well above the current level, whilst technical indicators have lost their bearish strength within oversold readings, but are far from suggesting an upcoming upward corrective movement. February 11th low at 1.0453 is the main bearish target on a break below 1.0490, although seems unlikely the price will do much until late in the US afternoon, when the US Federal Reserve will release the Minutes of its latest meeting.

Support levels: 1.0490 1.0450 1.0410

Resistance levels: 1.0520 1.0565 1.0590

GBP/USD Current price: 1.2450

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The GBP/USD pair advanced at the beginning of the day, reaching a daily high of 1.2507, from where the pair eased back on renewed dollar's demand after London opening. The UK released the second estimate of Q4 GDP, slightly revised higher to 0.7% from 0.6%, although the annualized figure came in at 2.0%, below the first estimate of 2.2%. Business investment fell by 1.0% in the same quarter, when compared to Q3. The Pound, bounced back after printing 1.2422, and while the downward potential remains limited, the 1 hour chart presents a bearish tone, as indicators head lower within negative territory, whilst the 20 SMA stands around 1.2475, gaining downward strength. In the 4 hours chart, technical readings maintain the neutral stance, as indicators lack directional strength within neutral territory, whilst the price continues moving back and forth around a flat 20 SMA.

Support levels: 1.2430 1.2380 1.2345

Resistance levels: 1.2475 1.2505 1.2540

USD/JPY Current price: 113.01

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Lagging US Yields keep the JPY buoyed. Despite the strong opening of European equities, the USD/JPY pair remains subdued, having trimmed most of its modest weekly gains, and trading barely above the 113.00 figure ahead of the US opening. The main reason behind yen's strength is US Treasury bond yields, as despite Wall Street's rally to record highs, yields have barely recovered from near monthly lows. As commented on the previous update, the political-risk background is another factor underpinning safe-haven assets, such as the JPY and gold. The pair is biased lower according to the 1 hour chart, as the price is back below its moving averages, with the 100 SMA providing an immediate resistance around 113.30 and technical indicators hovering near oversold readings with no aims of turning higher. In the 4 hours chart, the price is a handful of pips below its 100 SMA whilst technical indicators have turned flat around their mid-lines, as investors enter wait-and-see mode ahead of the release of FOMC Minutes.

Support levels: 112.90 112.50 112.10

Resistance levels: 113.30 113.65 114.00

AUD/USD Current price: 0.7678

View Live Chart for the AUD/USD

The AUD/USD pair jumped to a daily high of 0.7709, but trimmed all of its daily gains and trades flat around its daily opening, at 0.7675 ahead of the US opening. Australia released its Q4 wage price index overnight, which came in line with market's expectations and presenting a modest uptick quarterly basis, to 0.5% from 0.4%. In the 1 hour chart, the price is below a modestly bearish 20 SMA, whilst technical indicators have retreated within positive territory, and head nowhere around their mid-lines. In the 4 hours chart, the price rests above a horizontal 20 SMA, whilst technical indicators turned lower, but remain within neutral territory, indicating that the ongoing range will likely persists.

Support levels: 0.7650 0.7605 0.7575

Resistance levels: 0.7710 0.7735 0.7770

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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