Financial market research and analysis

EURUSD is retracing the surprise gains recorded following the ECB meeting last week. The key short-term support is eyed at 1.1067 (major 38.2% retracement on post-Draghi rally). Above this level, the EURUSD could well develop the bullish trend toward the 1.1376 (Feb 11th high), especially if the US dollar shows signs of weakness before the FOMC decision scheduled on Wednesday. A slide below 1.1067 could signal a short-term bearish reversal and encourage a downside correction toward the 1.1000 mark before the 1.0915 (100-dma) and then to 1.0826 (Mar 2nd low). From a medium term point of view, a break below this level could pave the way to 1.0800/10 (February lows) then all the way down to the 1.0725 (minor 74.6% before 1.0524 (Dec low). 

According to CFTC data, Japan net longs reached their highest since March ’08.Analysts expect the BoJ to proceed with more cuts into negative territory, but not just yet. The USDJPY is testing 114.00 offers, First level of resistance is 114.44 (March 10th high) and if this level is broken we might expect a further rise to 115.08 ( major 38.2% retrace on Jan 29 – Feb 11 decline). First support is eyed at 113.50 (minor 23.6% retrace on Feb decline), and in case of a break out we can expect a slide to 112.20/111.90 area. From this point a further break could bring the price down to 110.99 (Feb dip).

Cable bounced lower from a one month high of 1.4437 on Friday. The 1.44 offers hold the GBPUSD back form extending gains toward the 1.45 mark. The budget statement (Wed) and the BoE decision (Thu) are expected to keep the agenda busy this week. UK Chancellor of the Exchequer George Osborne is expected to stick to his fiscal consolidation plans, especially knowing that the Bank of England has little choice but to stay still on the record low interest rate of 0.50%. The GBPUSD performed well last week. Trend and momentum indicators are positive, suggesting that the 1.45 resistance is still under close watch. Pullbacks are expected to find support at the major 38.2% retrace on Feb 29 – Mar 11 rise, 1.4207. If this level is broken, the pair will step in the bearish consolidation zone for a potential setback toward the 1.40 mark. Intermediate supports are eyed at 1.4136 and 1.4066 (Fib 50% and 61.8% retrace respectively).

AUDUSD extended gains to new high 8-month high of 0.7596, after breaking above the 75 cents last week. The trend and momentum indicators are positive, suggesting that gains could extend to 0.7655 (Fib 61.8% retrace on May-Jan decline). The first level of resistance is the new (0.7593 March 14th High), before 0.7796 (June 22nd high). RSI indicator is in overbought (70%) so we might expect a retracement, especially given that the current levels could start making the RBA feel uncomfortable and bring the officials to talk down the AUD in the coming days. A break below the 0.7500 mark could then take us back to before 0.7430 (200hma) before the critical 0.7409 (major 38.2% retrace on Mar 1 – 14 rise), below which the AUDUSD will step in the bearish consolidation zone and we could consider a deeper correction down to 0.7352 (50% major on Mar 1 – 14 rise).

Gold is hovering around the $1250 on the back of softer Fed expectations before the FOMC decision. The yellow metal is still on a bullish trend, keeping the possibility of a re-test of 1285 resistance (March 11th High), and even an extension of gains to $1300 on the table. First support is eyed at 1225 (minor 23.6% on Dec-Mar rise), if broken  could encourage more sellers toward the $1200 mark.

WTI cheapened on news that Iran is preparing to boost output to 4 million barrels a day, now trading in 34.90/38.00 area. Support is eyed at the 50-day moving average ($36.70) if broken could damage the recent optimism and pull the prices down toward $34 (major 38.2% retrace on Feb-Mar recovery). Below this level, the WTI should step in the bearish consolidation zone. A deeper correction could develop down to $32.50 (Fib 50%) before $31.00 (Fib 61.80% retrace) and $30 mark.