The pair clocked a high of 1.4950 before falling back below 1.49 levels. The area around 1.5 continues to act is proving to be a tough barrier to break, as the pair has failed quite a few times around the same in the last few trading sessions. Moreover, the weak inflation data released earlier this week continues to weigh over the Pound. However, the pessimism over falling inflation could be erased if the data today show a sharp rise in the retail consumption. In this case, the declining inflation would be viewed as net positive. However, a weak retail sales would be a double whammy for the British Pound, sending the pair to 1.48 levels.
On the hourly chart, we see the pair has bounced – off from the 200-MA twice in this week. We also see a bearish crossover between the hourly 50-MA and 100-MA. The pair is moving in a narrow range of 1.4880-1.49 since the Asian session today, with the hourly RSI neutral at 50.00 levels. With a strong UK retail sales print could push the pair above the sideways channel resistance at 1.4976, while a weak number could push the pair below the channel support (hourly 200-MA) at 1.4841. However, it is essential the pair sustains above/below the said level in either of the cases. The immediate gains are likely to be capped around 1.5, while the losses, in case of a weak retail sales figure, could drive the pair well below 1.48 levels.
EUR/USD Forecast: Short squeeze continues, stiff resistance at 1.1
The EUR/USD clocked a high above 1.1 yet another time, but failed to end above the same on Wednesday. The shared currency continued to witness a short squeeze post the last week’s dovish Fed statement. The upbeat German IFO data released on Wednesday saw the pair rise above 1.1 levels. However, a minor uptick in the capital goods seen in the durable goods orders data led to a recovery in the US dollar. The pair currently trades 1.0980 levels, ahead of the thin European data docket. Unless the German consumer confidence is surprisingly weak/strong, the shared currency is unlikely to get influenced. A bigger trigger is seen in the US session – weekly jobs data and services PMI. Given, the weakness in the equity markets, the USD could catch a bid wave as we move into the European session. In such a case, the pair could dip to 1.0923.
On the hourly charts, a triangle formation could be seen. The pair currently trades between the triangle resistance and support located at 1.1103-1.0969. Given the repeated failure to sustain above 1.10, the pair could beach the support at 1.0969, to test the 5-DMA located at 1.0923. However, a deep sell-off is unlikely and thus a fresh demand for the Euros could be anticipated at 1.0923 levels. On the other hand, an hourly close above 1.1103, may not be sufficient to push the pair over and above 1.1030 levels. Moreover, an hourly close above 1.1030 could bring in fresh demand for Euros and take the pair higher to 1.11.
USD/JPY Forecast: Risk aversion, year-end flows favor Yen
The USD/JPY pair has dipped below 119.00 levels as overnight weakness in the US equities triggered risk aversion in the Asian markets. The Yen also finds support from the financial year end repatriations flows. The last week of March every year is usually a time when the Japanese Yen appreciates. The weak US durable goods orders report released on Wednesday also supported the Yen. However, the gains in the yen have been slow as the markets remain confused over the timing of the interest rate hike in the US. Moreover, the risk aversion in the equities has failed to weaken the US Treasury yields; the 10-year yield is back above 1.9%.
On the charts, the pair has dipped below the 50-DMA and the 100-DMA levels today. Given the bearish daily RSI, the pair could test the support at 118.61 levels today. However, the hourly and the 4-hour RSI have hit the oversold zone. Consequently, the pair could see a re-test of 119.00, before extending the losses. A disappointing weekly jobs data in the US, coupled with a weak services PMI figure could push the pair down to 118.22 levels.
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