Dollar Slips, But Downside Is Limited For Now
The US dollar posted strong declines yesterday after US housing starts and building permits indicated a slowdown in the once strong housing sector. However, it is still too early to tell if the downside will prevail for the US dollar, opening the possibility that yesterday’s price action in the dollar might well be a flush of long positions ahead of a potential correction to the upside.
EUR/USD Daily Analysis
EUR/USD (1.13): EUR/USD posted some major gains yesterday after nearly three days of moving in a small range. Price is back trading above the $1.13 – $1.135 handle and could potentially threaten the $1.140 region. The 4-hour chart continues to show the hidden pergence, and unless EUR/USD manages to rise above 1.1421 and post a new high above 1.1464, the bias remains to the downside with 1.130 support as the initial focus.
USD/JPY Daily Analysis
USD/JPY (108.9): Price action in USD/JPY was fairly limited yesterday, with the yen managing to hold its ground despite a weaker dollar, with 108.95 coming in as a minor support/resistance, in play currently. The minor rising median line is currently showing USD/JPY likely to move to the downside and the consolidation within the triangle pattern indicates some downside pressure. USD/JPY could dip back to 108 support in the near term, and only a close below this level will indicate further downside.
GBP/USD Daily Analysis
GBP/USD (1.43): GBP/USD has managed to rise towards 1.4425 level of resistance on the daily chart and price action has broken out to the upside, but not quite convincingly. Only a close above 1.4425 on the daily basis will confirm further upside. On the 4-hour chart, prices are currently retreating, and the current pullback could push GBP/USD lower to retest the support at 1.426 – 1.424, which could see a renewed momentum push GBP/USD back towards 1.4437 – 1.4425 to test for resistance. A close below 1.4263 – 1.4247 could, however, see GBP/USD weaken and dip towards 1.415 – 1.4126.
Gold Daily Analysis
XAU/USD (1252): Gold prices rallied yesterday and posted strong gains. However, the upside bias remains limited for now, although we could expect a test to 1260. With prices failing so far to post any fresh highs and gold currently trading above 1250 – 1243, we could expect potential downside in the precious metal for a test to 1230 – 1225 region.