Financial market research and analysis

EURUSD dropped following its attempt to push through 1.0917 in New York in the aftermath of the FOMC statement. Trend and momentum indicators are neutral as the pair treads water within the 50/61.8% retracement from last week’s ECB meeting. Above this level, gains could extend to 1.1000 before the key mid-term resistance is eyed at 1.1055 (200dma). On the downside, 1.0854 (Fib 38.2% retrace) and 1.0805/1.0778 area (minor 23.6% on Aug-Dec’15 decline / post-Draghi low) should lend support.

USDJPY surged on rising speculation that the BoJ will add stimulus. Although the BoJ is not expected to proceed with a concrete action this week, a dovish rhetoric could give some relief to the market and help the USDJPY higher. The critical resistance at 118.95 (major 38.2% on Nov-Jan decline) is being tested. Above this level, USDJPY will move into a bullish consolidation zone and could extend gains to 119.87 (Fib 50%). Decent vanilla calls trail above 119.00 for today and tomorrow’s expiries. Support is eyed at 117.82 (minor 23.6%) and 117.53 (Ichimoku conversion line).

The pound has surpassed its 40 point range against the dollar on foot of the in-line Q4 GDP print. GBPUSD has surpassed the $1.43 level despite the fact that interest rates are likely to remain as is until at least the final quarter of 2016. Short-term resistance remains strong at 1.4354 (minor 23.6% retrace on Dec-Jan decline) and even surpassing this level, Cable is expected to face a choppy path upwards. As BoE’s Carney mentioned the possibility of a rate cut below the present level 0.50%, macro players will likely play the sell-side for the time being. Key mid-term resistance is eyed at 1.4523 (major 38.2% on Dec-Jan decline). Below this level, traders are expected to remain sellers on rallies.

AUDUSD is in a bullish consolidation zone and is testing 0.7075 (Fib 50%) resistance on the upside. With stronger trend and momentum indicators, we may expect to see further extension of gains to 0.7149/52 (100 and 50 day moving averages respectively). Key support is eyed at 0.6985 (major 38.2% on Jan 20 to date rally). 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 continues to absorb the risk-averse bulls unwilling to participate in these abnormally erratic markets. The safe-haven metal breached a 3-month high after soaring 1% higher post-FOMC statement. Gold hit $1128 in New York, and gained enough momentum to fight back any resistance it may face by 1130/1132 (one-month uptrend channel top / 200dma).

Oil consolidates gains in a tight range around $32. Above $30/29.50, we may see a further recovery to $34.00/34.50. Downside risks prevail however and the risk of a slide back below $30 is considerable given that promises to cut production to abate the supply glut are nothing more than theoretical for now.