EURUSD trades higher
EURUSD raced higher on Monday, confirming the positive divergence between our short-term oscillators and the price action. Bearing in mind that both the German ZEW indices for March are anticipated to have risen, I see the likelihood that the rebound may continue for a while, perhaps for another test near the 1.0665 (R1) resistance line. However, I still believe that the short-term picture is negative. I would expect any up moved to be short-lived and I would expect a move below 1.0460 (S1) to see scope for extensions towards the 1.0360 (S2) barrier, defined by the low of the 8th of January 2003. With regards to the broader trend, I believe that the pair is still in a downtrend. EURUSD is printing lower peaks and lower troughs below both the 50- and the 200-day moving averages.
EURUSD started strengthening well before the German ZEW survey for March, and in the event, the survey added to EUR gains. Both the current situation and expectation indices surged for the 5th consecutive month, with the former beating the market consensus while the latter a bit below forecast. Even though the continued improvement in the ZEW reflects the firming momentum of the German recovery and adds to the recent encouraging data, it is not enough to reverse the longer-term path of EURUSD, in our view. The pair found resistance around the 1.0620 line, which confirmed our view that any bounce following the release is expected to be short-lived. The common currency is likely to continue its longer-term downtrend and we would view any upside corrective waves as renewed EURUSD selling opportunities.
• Support: 1.0460 (S1), 1.0360 (S2), 1.0185 (S3).
• Resistance: 1.0665 (R1), 1.0800 (R2), 1.0900 (R3).
AUDUSD lower after RBA minutes
AUDUSD slid somewhat after the minutes of the latest RBA policy meeting showed what we already know, that further easing over the period ahead may be appropriate. The minor slide was stopped at 0.7610 (S1), where a dip is likely to aim for another test at the 0.7560 (S2) barrier, defined by the low of the 11th of March. Both our oscillators, although pointing sideways, remain within their negative territories, showing that the momentum is still negative. Switching to the daily chart, I see that the overall trend of the pair is still to the downside, and the recent low at 0.7560 (S2) confirmed my view that the 3rd – 26th of February advance was just a corrective move of the larger uptrend. I still believe that we are going to see AUDUSD challenging the 0.7500 (S3) territory in the future.
• Support: 0.7610 (S1), 0.7560 (S2), 0.7500 (S3).
• Resistance: 0.7680 (R1), 0.7750 (R2), 0.7840 (R3).
USDJPY consolidated above 121.00
USDJPY moved in a consolidative manner staying between the support line of 121.00 (S1) and the resistance hurdle of 121.60 (R1). The rate is also trading pretty close to the black uptrend line and the 50-period moving average. As a result I would expect the forthcoming directional move to be positive, perhaps for another test at the 122.00 (R2) territory, the high of the 10th of March. Our momentum studies support the notion. The RSI hit support at its 50 line and rebounded somewhat, while the MACD, already positive, shows signs of bottoming and could move above its signal soon. As for the broader trend, the rate is still trading above both the 50- and the 200-day moving averages, and above the upper bound of the triangle that had been containing the price action since November. This keeps the overall picture of USDJPY positive.
• Support: 121.00 (S1), 120.55 (S2), 120.00 (S3).
• Resistance: 121.60 (R1), 122.00 (R2), 122.50 (R3).