IKOFX Daily Market Analysis

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EURGBP Crushed As Carney Suggested Rate Hike

The Euro was seen trading lower earlier during the Asian session against the British pound, as the Bank of England Governor’s speech ignited an up-move in the British pound. Mark Carney mentioned that there is a possibility of a rate hike ahead of the plan. This was seen as a buying opportunity by the British pound buyers. The EURGBP pair fell more 50 pips and traded below the all-important 0.8000 level.

The EURGBP pair fell sharply to trade around the 0.80 level, as the market sentiment tilted in favour of the British pound. The pair has breached a trend line which was holding the downside in the pair. This break can be seen as critical, as it might open the doors for further losses in the short term. The pair might even fall towards the 0.7900 level if the losses continue. The pair is trading below 100 and 200 weekly simple moving averages, which is another negative sign.

The only positive sign as of now is that the RSI is flirting around the extreme level on the weekly timeframe. This could result in a short-term pullback in the pair. There are several support levels on the way down for the pair, and it would be interesting to see where buyers emerge to take the pair higher again.

German Consumer Price Index Data
The German Consumer Price Index data was published during the London session by the Federal Statistical Office Germany. The Forecast was slated for a 0.9% rise in May 2014. The outcome was in line with the expectations, as the Consumer prices in Germany rose by 0.9% in May 2014 compared with May 2013. Moreover, the month-over-month reading registered a 0.3% decline. The EURGBP pair was unchanged after the release.

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GBPUSD Bulls Likely To Push The Pair Towards The 1.7200 Resistance Zone

The British pound surged higher against most of its counterparts during this past week, especially against the US dollar. The GBPUSD pair almost tested the 1.70 level. The market sentiment remains in the favour of more gains in the GBPUSD pair in the medium term. The pair has managed to clear few major hurdles on the weekly timeframe, which opens the door for further upside acceleration in the days to follow.

The GBPUSD pair has breached all major hurdles on the weekly timeframe, as can be seen in the chart attached. However, there is one more resistance around the 1.7040 level, which is also the previous swing high for the pair. A break above the mentioned resistance zone might take the pair towards the 50% fib retracement level of the last major drop from the 2.1146 high to 1.3501 low. This an important level, which might present a selling opportunity in the medium term, as sellers are expected to appear around the mentioned fib level.

The RSI on the weekly timeframe is also heading towards the extreme levels, which might also encourage the bears around any critical barrier. However, the fundamentals still favour the British pound compared to the US dollar. So, one need to be very careful selling the GBPUSD pair around a breakout zone.

US Economic Releases
Today, during the New York session, the NY Empire State Manufacturing Index rates and Treasury International Capital (TIC) Net Long-Term Transactions data will be published. The NY Empire State Manufacturing Index is expected to fall from the 19.01 level to 15.00 level. If the outcome disappoints the market, then we can witness a move above the 1.70 level in the GBPUSD pair.

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EURAUD Nudging 100 Hourly SMA, Eyes A Break Higher

The Euro traded lower against the Australian dollar during this past week. However, this week the EURAUD pair has started on a positive note. The pair was seen trading a touch higher during the today’s London session. There is a bullish trend line forming on the hourly timeframe for the pair. The pair after finding support around the trend line support area at 1.4358 managed to climb towards the 100 simple moving average (1H). However, it is currently struggling to break the mentioned SMA, and consolidating just below the 1.4425 level.

It is quite possible that the EURAUD pair might gain bids in the short term, and manage to break the 100 SMA. If it trades higher, then a move towards the 61.8% fib retracement level of the last drop from the 1.4462 high to 1.4385 low is feasible. Any further strength might take the pair towards the last swing high of 1.4460. It is important to note that the mentioned fib level also coincides with a bearish trend line on the hourly timeframe, which can be seen in the chart attached. So, sellers might appear around the stated resistance zone.

The RSI on the hourly timeframe has managed to clear the 50 level, which is a positive sign. However, the 100 SMA and bearish trend line might continue to present offers in the short term.

Euro Zone CPI data
Moments ago, the Euro zone inflation data was published by the Eurostat. The outcome was in line with the forecast, as the Euro area annual inflation was confirmed at 0.5%. This resulted in a small rise in the Euro.

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AUDJPY BREAKS DOWN AS AUSTRALIAN DOLLAR STRUGGLES TO FIND BUYERS

The Australian dollar is trading lower against the Japanese yen, as the AUDJPY pair cleared an important support level to trade lower. There was a critical trend line on the hourly timeframe for the pair, which was breached earlier during the Asian session. This break can be seen as crucial as it gives sellers a reason to gain momentum in the short term. Moreover, the pair is trading below both important hourly simple moving averages – 200 and 100.

Currently, the pair is flirting with the 61.8% fib retracement level of the last move higher from the 94.94 low to the 96.14 high. If the pair fails to hold the mentioned fib level, then a move back towards the previous low would be on the cards. Any further weakness will depend a lot on the strength of the Japanese yen. Alternatively, if the pair manages to jump higher from the current levels, then the broken trend line might act as a resistance for the pair. If sellers fail to defend the trend line, then buyers might push the pair towards the 200 hourly SMA.

The RSI on the hourly timeframe is around the extreme levels, which points that a short-term bounce is possible in the sessions to follow. However, any correction or retracement can be seen as a selling opportunity if the pair stays below the 200 hourly SMA.

Australia’s New Motor Vehicle Sales data
Earlier during the Asian session, the Australia’s New Motor Vehicle Sales data was published by the Australian Bureau of Statistics. The outcome was on the positive side, as the report mentioned that the New Motor Vehicle Sales has increased by 0.3% in May 2014, compared with April 2014.

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EURCAD Needs To Break 1.4760 To Get Going

The Euro traded lower against the Canadian dollar during this past week. However, the EURCAD pair seems to be now stabilizing around the 1.4700 support level. There is a classic breakout pattern forming on the hourly timeframe for the pair. There is a trend line formed, which has acted as a resistance for more than a couple of occasions. If the pair manages to clear the plotted trend line, then a move higher is possible in the near term.

Currently, the same trend line coincides with the 23.6% fib retracement level of the last move lower from the 1.4954 high to the 1.4670 low. So, technically this trend line holds a lot importance in the short term. One important thing to note here is that the pair is now trading above the 100 hourly simple moving average, which can be considered as a positive sign. So, once the pair break the trend line resistance zone, then it might climb higher in no time.

The RSI on the hourly timeframe is also holding the 50 level nicely, which adds to the bullish pressure on the pair. A break and close above the 1.4760 level might take the pair towards the 38.2% fib level, followed by the 200 hourly SMA.

German ZEW Economic Sentiment
Moments ago, the German ZEW Economic Sentiment was released. The market was expecting a rise from 33.1 to 35.0. However, the outcome was a disappointing one. The German ZEW Economic Sentiment fell to 29.8. The Euro fell in an early reaction. It would be interesting to see whether it continues to trade lower in the coming hours or not.

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AUDNZD Continues To Fall As Aussie Struggles To Hold Ground

The Australian dollar was seen trading lower against the New Zealand dollar as the RBA meeting minutes failed to impress the Australian dollar buyers. On the other hand, the New Zealand dollar managed to hold the gains, which resulted in a move lower in the AUDNZD pair. The pair is now heading back towards the last swing low of 1.0740. The mentioned level is just above the 76.4% fib retracement level of the last up-move from the 1.0647 low to the 1.1035 high.

There was a bullish trend line on the 4 hour timeframe for the pair, which was breached earlier during this week. The pair is also trading below the 100 and 200 simple moving average (4H), which is a negative sign. So, if the pair manages to bounce from the current levels, then the broken trend line support might act as a resistance in the short term. If the pair manages to clear the trend line, then sellers are expected to appear around the 200 SMA (4H).

On the downside, the pair might fight around the 76.4% fib level and the swing support area. However, if it fails to hold the mentioned support zone, then it could drop towards the previous low of 1.0647.

RSI Supporting?
The RSI on the 4 hour timeframe is around the extreme levels, which is an early-warning sign. There is a chance that the pair might bounce from any of the mentioned support levels. The market sentiment remains elevated in favour of the New Zealand dollar, but the fact remains that a pullback from the current levels cannot be denied.

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GBPCHF Looks Set For A Test Of 1.5450

The British pound is one of the best performers in the recent times against many major currencies, including the Swiss franc. The GBPCHF pair has managed to clear few important resistances on the weekly timeframe, which has opened the door for a test of the previous high of 1.5450. The fundamentals also support the British pound for more gains in the medium term. The most interesting part is that if the GBPCHF pair manages to climb towards the 1.5450 level, then would it able to break the same or not.

One important thing to note here is that the pair has settled above the 61.8% fib retracement level of the last drop from the 1.7064 high to 1.1462 low. This can be considered as a bullish sign, as it is even possible that the pair might head towards the full 100% extension in the medium term. However, the recent crisis has the potential to increase the safe haven demand. In that situation, the Swiss franc might gain some bids against the British pound.

On the downside, if the pair retraces from the current levels, then the 1.50 level might act as a support. Moreover, the 100 and 200 weekly simple moving average is also sitting around the 1.4800 level, which can be seen as a medium term support area.

RSI Heading Towards Extreme Levels?
The RSI on the weekly timeframe is heading towards the extreme level, which might coincide with a test of the 1.5450 level. If this happens, then the pair might retrace or correct from the mentioned resistance zone. Let’s see how the pair trades in the coming weeks, as the market prepares for the upcoming risk events.

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GBPUSD Eyes A Major Short-term Break

The British pound after testing the 1.70 resistance level a couple of times during this week moved back lower. However, the pair managed to find buyers around the 23.6% fib retracement level of the last major move higher from the 1.6693 low to the recent high of 1.7011. The pair is now again testing the 1.70 barrier. It is important to note that there is a critical trend line connecting last swing highs, which is acting as a hurdle for the pair.

If the pair manages to break the mentioned trend line and settle above the 1.70 level, then a run towards the 1.7048 resistance level, which represents the previous swing high is possible in the short term. The RSI on the 4 hour timeframe is also around the extreme levels, which cannot be considered as a bullish sign. However, if buyers take control, then a break in the coming sessions cannot be denied.

One More Failure?
If the pair fails again to clear the 1.70 resistance level, then it could be discouraging for the sterling bulls. In that situation, a move back towards the 23.6% fib level would be on the cards. If sellers take control, then the pair might fall towards the 38.2% fib level, where buyers are expected to appear again.

The UK retail sales data will be released by the National Statistics later during the London session. The forecast is of 0.5% decline in the retail sales, and if the outcome exceeds the expectation, then the British pound can trade higher in the short term.

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Negative Signals Indicate Losses To Extend For USDJPY

The US dollar continued its decline against most of its major counterparts including the Japanese yen. The USDJPY pair after creating a short-term top around the 102.40 resistance zone moved lower. There was a bullish trend line formed on the hourly timeframe for the pair. The US dollar sellers were seen aggressive during yesterday’s trading sessions, and as a result the pair breached the highlighted trend line. This particular break might be seen as crucial, as it has the potential to take the pair back towards the last low of 101.60 level.

New Weekly Low?
The broken trend line acted as a resistance yesterday, and might continue to hold the upside in the pair. If the pair breaks the 76.4% fib level of the last leg higher from the 101.60 low, then it might open the doors for a test of previous low. If sellers take control, then it could create a new weekly low as well. One important thing to note here is that the pair is trading below both major simple moving averages on the hourly timeframe – 100 and 200, which can be considered as a bearish sign in the short term.

If the pair fails bounces from the current levels, then it would be interesting to see whether it can close back above the broken trend line or not, which is also coinciding with the 100 hourly SMA. A break and close above the 100 SMA could take the pair back towards the previous swing high of 102.20 level.

The hourly RSI is below the 50 level, which adds value to the bearish bias. As long as the pair is trading below the 100 hourly SMA more losses cannot be denied in the short term.

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AUDCHF Looks Like Set For More Gains

The Australian dollar climbed higher during the late Asian session, as the data which was released in the China exceeded the market expectation. The Chinese manufacturing PMI registered a seven month high of 50.8, beating the expectations of 49.7. This was seen on the positive side by the Australian dollar buyers, as the pairs like AUDUSD and AUDCHF were seen trading higher. One of the biggest gainers was AUDCHF pair. The pair climbed higher post data release, and traded close to an important trend line on the hourly timeframe.

Currently, the pair is trading around the same trend line, as highlighted in the chart. It looks like that the pair is going to break it and if it manages to settle above the same, then it might call for a run towards the last high of 0.8479. It is worth mentioning that the pair has breached the 76.4% fib level of the last drop from the 0.8479 high to 0.8369 low. Moreover, it is also trading above the 100 and 200 simple moving average on the hourly timeframe. All these points suggest that the chance of a move higher is more compared to a failure to break the trend line.

If the pair fails to trade higher and challenge the previous high, then it might find buyers around the broken 200 hourly SMA. More loses might take the pair towards the 100 hourly SMA. The RSI has reached to extreme level on the hourly chart, which means we might witness a small pullback in the pair before it climbs back again.

There are no risk events scheduled in the coming session for Aussie and Swiss. So, the pair could be mostly driven by the market sentiment in the short term.

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EURGBP Breaks Higher Post Mark Carney’s Remark

The Euro finally traded higher against the British pound, and cleared an important resistance zone during the speech of the Bank of England’s Governor Mark Carney. The most important point to note from his speech was the stress regarding the dependency of the first rate hike and incoming data. He stated that the rate hike would be dependent on data. Moreover, he mentioned that the rise in the interest rates will be gradual. This did not go down well with the British pound buyers, as it lost ground against the Euro and the US dollar.

The EURGBP was the most interesting one, as there was a triangle forming in the hourly timeframe. The pair breached the same and traded higher. This particular break was significant as the up-move in the pair was sharp taking it all the way back to the recent swing high of 0.8024. The pair also managed to clear the 200 and 100 hourly simple moving average. The pair might consolidate the recent gains before moving higher again. Initial support can be seen around the 38.2% fib retracement level of the last run from the 0.7962 low to 0.8024 high. Any further losses should find buyers around the 50% fib level.

Alternatively, if the pair continues to trade higher from the current levels, then it might challenge the 0.8050 resistance area. More gains above the mentioned level would be largely dependent on the strength of the Euro, as it has been struggling to gain ground in the recent days.

The RSI is also around the extreme levels, which means there might be a pullback soon. However, the triangle break was crucial, and any dips from the current levels could be seen as a nice buying opportunity.

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GOLD traded higher during this past week, as buyers took control to take the prices higher from the $1260 support level. The precious metal traded as high as $1325, and then started consolidating the gains. There was a wedge formed on the hourly timeframe, which was broken earlier during the day. This can be seen as an important break, as this might have halted the rise in GOLD. If sellers take control, then the yellow metal might trade lower in the coming sessions.

Currently, the prices are around the 100 hourly simple moving average, which is holding the downside for now. If GOLD breaks the 100 hourly SMA, then it might open the doors for further downside acceleration towards the 38.2% fib retracement level of the last up-move from the $1258 low to $1325 high where buyers might appear. If they fail to protect the mentioned fib level, then GOLD could fall towards an important confluence support zone of 50% fib level and the 200 hourly SMA at $1292. This level should hold if the bullish trend needs to sustain in the medium term.

On the other hand, if GOLD rises from the current levels, then it might face hurdle around the broken wedge support area, which might act as a resistance now. If buyers manage to clear the same, then it might re-establish the bullish pressure and take the prices back towards the recent high. A break above $1325 would expose the $1340 resistance area in the short term.

The RSI is heading towards the 50 level, and if breaks together with the price above the $1310 level, then more gains are feasible. Overall, the trend is still bullish as long as 200 hourly SMA holds.

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More Losses To Follow For EURJPY?

The Euro was seen trading lower against the Japanese yen Intraday. The EURJPY pair has breached an important bullish trend line on the hourly chart. The highlighted trend was coinciding with the 100 simple moving average (hourly) and 23.6% Fibonacci retracement level of the last up-move from the 137.70 low to 138.92 high. So, this break was critical, and has opened the doors for further downside acceleration. Currently, the pair is flirting with the 200 SMA (hourly) and struggling to break the same.

However, this does not deny the fact that the pair might now trade lower in the coming sessions possibly towards the 50% fib retracement level. If sellers gain control then the pair might even challenge the 61.8% fib, followed by the previous low of 137.70. If the pair bounces from the current levels, then the broken trend line might act as a resistance, followed by the 100 hourly SMA. A break and close above the 100 SMA could again establish the bullish trend in the pair, which might take it towards the last high at least.

The hourly RSI is below the 50 level, which can be considered as a negative sign in the short term. If the RSI breaks above the 50 level and settles above, then the chance of a run towards the 138.80 level would increase.

Japan’s CPI and Unemployment Data
Later during the next Asian session, the Tokyo’s and national Consumer price index data will be published by Statistics Bureau. If the outcome stays in line with the expectations or exceeds, then the EURJPY pair could continue trading lower. Moreover, the Japan’s unemployment rate will also be released, which is expected to come at 3.6%.

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Long Term Perspective On NZDUSD

The New Zealand dollar has remained elevated in the recent times, despite weakness in the risk sentiment. One of the main reasons for the rise in the New Zealand dollar is the hawkish stance of the Reserve Bank of New Zealand. The central bank has increased the key interest rates more than a couple of times recently, and looks set for one more rise at the upcoming meeting. However, one important point to note here is that the central bank has also mentioned time and again that the rise in the New Zealand dollar might hurt the economy, and they might intervene if required at some point of time. So, one need to be very careful chasing the current rise in the New Zealand dollar.

Technically, the pair has recently breached the monthly highs and traded higher. Earlier during the Asian session, the New Zealand’s imports, exports and trade balance data was released by the Statistics New Zealand. The outcome was mixed, as the report mentioned that the exported goods rose to $4.6 billion in May 2014, and trade balance for May 2014 was a surplus of $285 million, missing the expectation of $300 million. The New Zealand dollar was seen trading higher after the data release and traded as high as 0.8775 against the US dollar.

There is a trend line on the weekly timeframe for the NZDUSD pair. This trend line is now coinciding with the previous high of 0.8840. So, this level holds a lot of importance in the medium term for the NZDUSD pair, as sellers might appear around the mentioned resistance zone moving ahead.

Moreover, the 1.236 extension of the last down-move from the 0.8630 high to 0.7682 low is around the 0.8900 level, which could also act as a major barrier if the pair manages to climb towards the same.

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USDCAD Climbs After Canadian GDP Data

The Canadian dollar has been gaining lately against the US dollar. However, the USDCAD pair reached an important support zone where buyers appeared to hold the downside in the pair. Moments ago, the Canadian Gross Domestic Product (GDP) data was released by the Statistics Canada. The forecast is slated for a 0.2% rise in April. However, the outcome was below the expectations, as the Canadian GDP grew 0.1% in April, the same pace as in March. The report mentioned that the output of service industries increased 0.3% in April, led by wholesale and retail trade and output of goods-producing industries fell 0.3%. Moreover, the Wholesale trade rose 1.3% in April. Overall, the data was not that bad, but the market discarded it because the expectation was on the higher side.

The USDCAD traded higher in an early reaction to the data and broke an important down-move trend line on the 4 hour chart. This trend line was also coinciding with the 23.6% fib retracement level of the last drop from the 1.0750 high to 1.0658 low. So, this break can be seen as important, which might encourage the US dollar buyers to take the UADCAD pair higher in the short term.

Currently, the pair is flirting with the 38.2% fib retracement level, and a break above the same might expose a run towards the 50% fib level. The 100 simple moving average on the 4 hour chart also sits around the same fib level. So, sellers might appear around the mentioned fib level.

On the downside, the broken trend line might act as support moving ahead. Any further losses should be limited considering the current price action and could find support around the recent low of 1.0658.

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EURUSD Holds Swing Support Despite Mixed PMI’s

The Euro traded a touch lower during the Asian session against the US dollar, but later the EURUSD pair managed to jump higher again from the 1.3680 support level. There were few important releases in the Euro zone, including the German manufacturing PMI, Spanish manufacturing PMI, French manufacturing PMI, Italian manufacturing PMI and German unemployment data. The outcome of all these events was mostly on the mixed side and both German unemployment change and the Euro zone manufacturing PMI missed the forecast. However, the readings were not at all on the negative side, and considering that the Euro was seen trading higher post the releases.

Technically, the EURUSD pair bounced from a significant support confluence zone. There is an important trend line on the hourly timeframe, which is also coinciding with the 23.6% fib retracement level of the last run from the 1.3610 low to 1.3696 high. So, this particular bounce can be considered as important, and it would be interesting to see whether the pair can manage to clear yesterday’s high or not. A break and close above the 1.37 level might call for more gains in the pair in the short term.

Alternatively, if the EURUSD pair falls from the current levels, and fails to hold the trend line and support area, then the pair can fall towards the 38.2% fib level, followed by the 50% fib level. If sellers take control, then momentum could take the pair towards the 100 hourly simple moving average where buyers might reappear.

There is a divergence on the hourly RSI, which can be considered as a warning sign. So, it would be better not to chase any further strength in the EURUSD pair.

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GBPUSD Threatens To Test 1.72

The British pound surged higher against the US dollar yesterday. There were mainly two reasons for the rise in the GBPUSD pair. First, the UK manufacturing PMI was released, which exceeded the market’s expectation by a fair margin and registered a healthy reading of 57.5. Secondly, the US ISM manufacturing PMI, which was published during yesterday’s NY session missed the forecast. So, the US dollar traded lower against the British pound post these events. The GBPUSD pair traded as high as 1.7165 yesterday. Currently, the pair is consolidating recent gains.

Technically, there is a channel forming on the 4 hour timeframe, which was also one of the reasons for the upside halt in the GBPUSD pair. The pair has managed to clear the 1.236 extension of the last down-move from the 1.6995 high to 1.6692 low. So, if buyers gain control, then an attack towards the 1.618 extension is possible in the short term, which is at 1.7185. It is from this level the pair might correct lower in the short term. Any further strength could take the pair towards the 1.7200 resistance area.

On the other hand, if the pair moves lower from the current levels, then it might find support around the 1.7130-20 support area. As long as the pair is trading above the broken 1.236 extension, the chance of a move towards the 1.618 extension is very likely.

The RSI on the 4 hour timeframe is around extreme levels, which might cause a consolidation or a small pullback in the short term. However, it does not put the pair in the bearish zone. So, buying dips might not be a bad idea in the short term for the GBPUSD pair.

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CADCHF Nudging Key Support Area; Eyes Break

The Canadian dollar has recently gained a lot of bids against most of its counter currencies, including the US dollar. However, it has failed to gain momentum against the Swiss franc. There is a critical bullish trend line forming on the 4 hour chart for the CADCHF pair, which has acted as a support for the pair on a number of occasions. The pair is again heading towards the mentioned trend line, and it would be interesting to see whether the Canadian dollar buyers can break it this time or not. Currently, the pair is flirting with the 23.6% fib retracement level of the last up-move from the 0.8229 low to 0.8363 high.

If the pair manages to break the trend line, then a move towards the 50% fib level is possible in the short term. The 100 simple moving average on the 4 hour chart also sits around the mentioned fib level. Any sustained momentum might take the pair towards the 76.4% fib level, which is also coinciding with the 200 SMA (4H). The RSI is nudging around the 50 level, and if it breaks lower, then the chance of a move lower in the CADCHF pair would also increase.

On the other hand, if the pair bounces from the trend line and support area, then a move back towards the recent high of 0.8340 is possible in the short term. However, a break above the mentioned level looks difficult as of now considering the current market sentiment.

Canadian Trade Balance Data
Later during the NY session, the Canadian imports, exports and trade balance data will be released by the Statistics Canada. If the outcome comes out positive, then a break of the trend line is possible moving ahead.

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SILVER Forming A Perfect Breakout Pattern

The US dollar outperformed many major currencies, but struggled to gain momentum against the precious metals. SILVER is still trading at higher levels despite strong NFP report in the US. The white metal survived an important support level on the 4 hour timeframe, and climbed back higher towards the $21.20 level. Today, the US markets will be closed due to the US Independence Day holiday. So, the market will most likely consolidate and one might not witness any major break going into the weekend.

Technically, there is a critical flag forming on the 4 hour timeframe, which looks like a bullish flag. The prices have bounced several times from the flag support trend line. Currently, SILVER is again heading back towards the flag resistance zone, which at present is around the $21.30 level. If SILVER buyers manage to break the flag resistance zone, then a run towards the $21.50 is possible in the short term. However, such breakout pattern always has legs, so it is very likely that the prices of SILVER jump towards the $22.00 level. Moreover, we must consider a fact that the fundamentals still do not support more gains in SILVER. So, chasing strength in the near term might be a bad idea.

On the other hand, if buyers fail to gain momentum, and SILVER moves lower, then a move back towards the flag support area would be very interesting. In that situation, if sellers take control, then a break lower might take the prices towards the 50% fib retracement level of the last bull wave from the $18.63 low.

The RSI is well above the 50 level, which suggest that the chance of a break higher is more compared to a break lower.

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German Industrial Production Falls, Takes EURUSD With It

The Euro is unstoppable against the US dollar, as the EURUSD pair seems to be under pressure since the start of the Asian session. The Euro sellers found one more reason to sell the shared currency during the London session. The German industrial production data was published by the Federal Statistical Office (Destatis). The report mentioned that the production in industry was down 1.8% from the previous month on a price, seasonally and working day adjusted basis according to provisional data in May 2014. This was not expected by the Forex market, as the forecast was slated for a 0.2% rise.

There is an awkward downward-sloping triangle forming on the hourly timeframe for the EURUSD pair. After the data release, the pair traded lower, tested the triangle support trend line. The Euro buyers managed to sustain the break, as the triangle support trend line also coincided with the previous swing support area at 1.3575. This support area holds a lot of importance in the short term for the EURUSD pair, as a break lower might call for more losses in the pair, which could take it towards the 1.3520 support level. One key point to note here is that the RSI was right around the 50 level, when the pair tested the triangle support area.

On the other hand, if buyers manage to take the pair higher from the current levels, then the triangle resistance trend line might come into play at 1.3590. If the pair breaks the mentioned level, then a move back towards the 200 hourly simple moving average is possible in the short term.

So, as long as the pair is trading above the 1.3575-70 support levels, the chance of a run towards the 1.3620 level is quite high.

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