AUDUSD and EURUSD to Move on Australian Data

04.11.14

AUDUSD and EURUSD to Move on Australian Data

AUDUSD 

AUDUSD Testing Major Support | Potential Long-Term Selloff

AUDUSD is currently stalling at a key support zone at the .8650 minor psychological level and may be due for a quick bounce. After all, stochastic on the daily time frame is indicating oversold conditions and that buying pressure could return. In that case, AUDUSD could bounce back to the near-term resistance at the .9400 major psychological mark.

On the other hand, a downside break off the current support zone might mean a move to the next visible floor around the .8050 level. Event catalysts that could trigger a breakdown for AUDUSD include the weak trade balance and the RBA interest rate decision, which emphasized that the Australian dollar is overvalued.

Other event risks for the week include US data, such as the ISM PMI releases and the non-farm payrolls report. The path of least resistance is to the downside, as monetary policy divergences between the RBA and the Fed could keep the downward trajectory intact.

A strong return in risk appetite, however, could still pave the way for AUDUSD gains past .9400. The next visible resistance area is located at the .9600 major psychological level.

EURUSD

More Downside for EURUSD? | Next Support at 1.2050

EURUSD has recently made new lows after breaking below a short-term support area around the 1.2700 handle. Price is testing the 1.2500 mark for the time being, with a downside break likely to confirm that the pair is in for more losses.

A quick look at the longer-term time frames for the pair shows that the next support area is at the 1.2050 minor psychological level, which is still roughly 500 pips away from the current trading levels of the pair. Stochastic is already in the oversold region though, suggesting that a retracement might happen before the pair heads any lower.

Pricing in ahead of the ECB rate decision this week could lead to more EURUSD weakness, as traders anticipate more dovish remarks from ECB Governor Draghi and his men. The central bank has already disclosed a few details on its asset-backed securities purchases but a commitment to do more could drive the euro much lower.

A potential pullback is still likely, especially if the ECB fails to deliver. In that case, EURUSD could recover until 1.2700 before setting its sights on its previous lows or on a higher pullback. Take note that pricing in ahead of the US NFP report could also impact the pair’s price action.

GBPJPY

Potential GBPJPY Retracement | Support Zone at 180.00

GBPJPY has staged a massive rally since Friday last week, when the BOJ decided to ramp up its asset purchases in order to ward off deflation and gear up for another sales tax hike. The pair has climbed from the 174.00 area to 182.00, with signs of pulling back for now.

GBPJPY could retreat until the 180.00 support zone, which seems to have acted as an area of interest earlier in the week. A bounce off this near-term support zone could push the pair back to the recent highs and perhaps on to new ones around the 185.00 major psychological level.

Event risks for the pound include the PMI releases, which saw a good reading for the manufacturing sector. Construction and services industries are set to print their reports later in the week, with the results likely to dictate pound direction. Another factor that could impact pound trading is the BOE rate decision, which could indicate no change in monetary policy for the time being.

Expectations for the BOE statement might have an impact on GBPJPY movement for now, as traders are expecting to hear a few dovish remarks from Governor Carney.