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The dollar tumbled on Thursday after dovish comments from Federal Reserve Chairman Ben Bernanke prompted markets to reassess expectations that the Fed would start to reduce stimulus as early as September.
Bernanke's comment came during early Asian trading hours, when market liquidity is at its lowest, triggering a rapid barrage of stop-loss selling of the dollar, exaggerating price action, traders said.
The Fed chief said the U.S. central bank would continue to pursue an accommodative monetary policy as inflation remained low and the unemployment rate might be understating the weakness of the labor market.
Before Bernanke's comments, markets were already trying to come to terms with the minutes from the Fed's June policy meeting which showed many board members indicated further improvement in the labor market outlook would be required to slow the pace of asset purchases.
A majority of market players were expecting the Fed will likely start to slow its monthly asset purchases of $85 billion per month by September this year.
The Euro surged post Fed and maintained positive sentiment during the Asian session, as gains hit fresh high at 1.3205. Strong rally retraced over 61.8% of 1.3414/1.2754 downleg, with downside risk being sidelined and near-term focus shifted higher. Positive short-term technicals support further advance that would look for test of 1.3250 zone 21/06 high / 76.4% retracement, however, corrective pullback is expected to precede fresh rally, as studies on 1 and 4-hour charts are overextended. Dips would look for 1.3030, as initial support, 38.2% retracement of 1.2754/1.3205 upleg and 03/07 high, ahead of psychological 1.3000 support, where reversal should occur, to avoid revival of bears that would come in play on a break below 1.2980, 50% retracement level.
Resistance: 1.3146, 1.3205; 1.3260; 1.3300
Support: 1.3067; 1.3030, 1.3000; 1.2980
The downside risk persists, as the price slid to 129.00 support, following repeated failure to sustain gains above psychological 130.00 barrier, when price stalled at 130.42. Hourly studies still hold positive tone, as 129.00 handle holds, however, more negative outlook is seen on 4-hour chart studies, with loss of 129.00 handle expected to accelerate lower and increase risk of double-top formation. Conversely lift above 130.42/54 peaks, would provide relief and shift focus higher.
Res: 129.85; 130.00; 130.42; 130.54
Sup: 129.05; 128.70; 128.50; 128.00
Cable extended recovery rally from fresh low at 1.4812, posted on 09/07 and regained levels close to 1.5200, on late yesterday / overnight’s acceleration higher. Dollar-negative comments from Fed keep the freshly established positive sentiment in play, with near-term studies moving in the positive territory. Formation of cup and holder continuation pattern, seen on 4-hour chart, supports further advance, with completion of the pattern seen on a clear break above 1.5200 barrier. Further gains would look for test of pivotal 1.5280/1.5300 zone, 50% retracement of 1.5751/1.4812 descend and 03/07 lower top. Overbought conditions, however, signal corrective action, before bulls re-assert, with dips seen ideally contained above 1.5000, psychological support / 50% retracement of 1.4812/1.5192 upleg.
Res: 1.5170; 1.5200; 1.5280; 1.5303
Sup: 1.5078; 1.5047; 1.5000; 1.4957
Dollar/yen lost ground after pullback from 101.52 high, accelerated on a break below psychological 100 support. Overnight’s fresh weakness extended to 98.22 and marks over 38.2% retracement of 93.78/101.52 rally and looks for further decline, as 4-hour indicators slid into negative territory. Immediate target lies at 98.00, round-figure support, ahead of 97.65, 50% retracement and 97.00 higher platform of 21-25/06. From the other side, oversold hourly studies suggest that corrective rally should precede fresh leg lower, with 99.00/25 zone offering initial resistance and 100 yen barrier, also 50% of 101.52/98.22 downleg, reinforced by 55DMA, expected to cap.
Res: 99.00; 99.25; 99.48; 99.77
Sup: 98.22; 98.00; 97.65; 97.00
The pair maintains positive short-term tone, as fresh strength above 0.9200 congestion top, regained 0.9300 handle and looks for full retracement of 0.9343/0.9035 descend. Positive short-term technicals support the notion, with clearance of 0.9343, 26/06 high, required to confirm base at 0.9035 and open way for more significant recovery of larger bull-trend that commenced form 1.0581, 11/04 high. Initial support lies at 0.9230, yesterday’s high, with previous barrier, now support at 0.9200, expected to contain dips and keep the downside risk sidelined.
Res: 0.9304; 0.9324; 0.9343; 0.9400
Sup: 0.9230; 0.9200; 0.9172; 0.9125
The cross remains within 1640/1740 range, as strong support at 1640 so far keeps the upside protected. Short-term studies remain negative and keep the downside risk in play, however, bullish MACD/RSI divergence on 4-hour chart, suggests possible stronger rally. Initial requirement is seen on a break above 1740, range top / 55DMA, to spark stronger recovery, otherwise, further attacks at 1.1640 base and possible resumption of the larger downtrend, would be likely short-term scenario.
Res: 1.1690; 1.1710; 1.1740; 1.1785
Sup: 1.1665; 1.1648; 1.1635; 1.1600
Gold’s price accelerated higher after breaking above 1267 congestion top and surged towards strong barrier at 1300, also 50% retracement of 1423/1180 descend. The price rides on the third wave that commenced from 1208 and could extend to 1330, Fibonacci 61.8% retracement, once 1300 barrier is cleared. Positive short-term studies remain supportive, with corrective dips on overbought hourly conditions, seen ideally contained at 1270 zone, previous resistance.
Res: 1302; 1321; 1330; 1338
Sup: 1278; 1269; 1260; 1248
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