Financial market research and analysis

EURUSD remained rangebound within the minor 23.6% and the major 38.2% retracement on Aug-Nov’15 decline (1.0805/1.0979). A breakout in either direction is necessary to assess a short-term direction with stronger conviction. Offers are eyed at 1.0985/1.1000 (January high / optionality) before the key mid-term resistance, 1.1054 (200dma). On the downside, 1.0805/1.0778 area (minor 23.6% on Aug-Dec’15 decline / post-Draghi low) should continue lending support.

USDJPY headed down toward the 120.31 Fibonacci support (major 38.2% retrace post-BoJ rally). Above this level, USDJPY is still in the bullish trend triggered post-BoJ last Friday. Any real conviction seems to wane however and the pair see a deeper correction to 119.96 (Fib 50%) and 119.50 (pivot). Above 120.31, the possibility for a sustainable extension through the 200dma (121.50) is on the radar. More resistance is eyed at the daily Ichimoku cloud top (121.83).

GBPUSD took out the resistance at 1.4354 (minor 23.6% retrace on Dec-Jan decline) on broad based USD weakness and rallied to 1.4445 in New York. With energy and miner sectors in the red in London, the announcement of 91% slump in BP profits combined to the BoE verdict and the Quarterly Inflation Report ahead (Thursday), the GBP-bulls may well lose their enthusiasm pre-1.45.
The key mid-term resistance is eyed at 1.4523 (major 38.2% on Dec-Jan decline). Below this level, traders are expected to remain seller on rallies. From a macro point of view, negative rates from the BoJ could revive the BoE doves given that BoE’s Carney hinted at a possibility of a rate cut earlier this week.

As expected, the RBA kept its cash rate target unchanged at 2.00%, stated that there is a scope for further easing if needed and reiterated that the Aussie is adjusting to the decline in commodity prices. AUDUSD topped at 0.71 before retreating to 0.7040 steadily. With resistance at the 0.7144/48 zone (50 and 100 day moving averages respectively), the AUDUSD should challenge the 0.7022 support (major 38.2% on Jan 20 –to-date rise). A break below this level should signal a short-term bearish reversal for a deeper downside correction to 0.6985 (Fib 50%) before 0.6919 (Jan 26 low).
Mid-term critical resistance remains at 0.7380 (Fib 38.2%). Below 0.7380, the mid-term bias remains negative and we see opportunity in selling the rallies.

Gold consolidated gains at the edge of the 1030/1036 zone including the 200dma and the Fib 61.8% on Oct-Dec decline. The softer US dollar remains supportive of the yellow metal above $1101 (major 38.2% on January rebound) and should keep the trend and momentum indicators marginally positive. A significant break above 1136 should pave the way to 1150/60 mid-term resistance.

Increasing speculative longs in oil future contracts point at a higher risk of a short squeeze. Oil shed 3% and the risk of a slide below $30 is now considerable. Short-term buying interest is expected to limit losses below $30.