Euro Fails To Keep Gains, 1.120 Support Could Be Tested
ORBEX | Aug 24, 2016 05:17AM ET
The US dollar was seen making attempts to recover some of its losses while yesterday’s new home sales data posted a solid month of growth. However, a strong recovery is questionable ahead of the other important events coming up later in the week.
More importantly, Friday’s speech from Janet Yellen will be the big event to watch for. In the mean time, with EUR/USD failing to keep its gains and the inside bar formed earlier, we expect the single currency could fall back to 1.120 to establish support.
EUR/USD Daily Analysis
EUR/USD (1.129): EUR/USD tested session highs to 1.13550 yesterday, but failing to build on its gains, prices closed bearish towards the end of the day yesterday. Still, price action remains within the inside bar's range, with 1.130 now playing a key role. A confirmed bearish breakout below 1.130 could signal a move to the downside with 1.120 support coming into the picture.
On the 4-hour chart, the resistance is seen at 1.1341, which has kept a lid on the rally following EUR/USD testing this level twice so far. The breakout from the rising median line could signal EUR/USD's decline to 1.1240 - 1.120 support zone. This is also validated by the bearish divergence.
USD/JPY Daily Analysis
USD/JPY (100.36): USD/JPY remains hovering near the 100.00 support level, with price action staying muted. On the 4-hour chart, following the test of resistance near 101.00 - 100.50 and the testback to the support at 100.00, further upside is seen only above 101.00 - 100.50 for a move towards 102.00.
With the US dollar looking a tad stronger, USD/JPY could possibly break out above this resistance level in the next couple of daily sessions.
GBP/USD Daily Analysis
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GBP/USD (1.317): GBP/USD is seen testing 1.320 resistance level following the inside bar formed on Monday. A bullish close above the high of 1.31856 could signal further upside to 1.34 resistance. On the 4-hour chart, price action is currently in the resistance zone of 1.32 - 1.3170.
Therefore, a convincing close on the 4-hour chart above 1.32 could trigger afurther upside to 1.336 - 1.335, marking the previous high formed in early August. In the event that GBP/USD fails near the current resistance, the downside could accelerate to test the previous support at 1.30, which could invalidate the daily session's inside bar bullish bias.
Gold Daily Analysis
XAU/USD (1337.06): Gold prices remain trading below the 1347.20 - 1360 resistance level, with price action staying subdued. It is quite likely that prices will slide to 1315 - 1300 support zone before we can expect any meaningful rally above $1360.
On the 4-hour session, gold is trading flat within 1340 and 1327.50 levels of resistance and support. The further downside can be seen on a confirmed close below 1327.50 towards the 1300 mark.
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