And the EUR/USD takes off towards the 1.3700 level.

The US Dollar has been under pressure by most of its major counterparts, days before the Non-Farm Payrolls report, that is why we have seen the Euro gain ground versus the greenback and it is holding on to a strong bullish momentum. On the 4 hour chart below of the EUR/USD we can see how the price has come very close to the 1.3700 level, which could act as a good resistance zone. We must be attentive to a possible visit to that level, because it could give us a good bounce to the downside and a possible short entry. To the downside, the 200 period exponential moving average may act as a good support now that the price has broken above it.

Possible visit of the GBP/JPY to the 172.00 level.

The Yen has been strengthening for today versus most of its major counterparts after the better than expected fundamental releases out of Japan, which have shown that the Japanese economy is expanding at a higher pace than previously thought. This lowers the probability of the Bank of Japan implementing further economic stimulus for the time being. That is why we see on the daily chart below of the GBP/JPY that the pair has dropped and it is close to touching the 172.00 level. A visit of the pair to the zone of the 172.00 could give us a bounce to the upside from there or at least we may see it stall at that point. Besides this being a round number and psychological level, we also see that the 55 Daily EMA, purple line, is around that same zone and it could help provide further support to the pair around that zone.

The kiwi is very close to a key resistance level.

The New Zealand Dollar versus the US Dollar is very close to touching its latest high from last month around the 0.8779 level. We may probably see a bounce from that level to the downside or at least we may see the pair stalling its bullish momentum there. If the pair does indeed bounces to the downside, it may try to reach the 0.8700 level which could act as a good support zone. On the daily chart below of the NZD/USD we can see a red line at the 0.8845 level; that level is a historic high for the pair reached on august of 2011. Therefore, if the price continues going higher and visits that zone of the 0.8845 level, it may try to bounce back to the downside. 

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Volatility shrinks even more on the EUR/USD.

The volatility on the EUR/USD has dropped to historic levels during the last few days, due to the fact that there is no clear consensus on the future direction of the US economy and the European Central Bank is keeping its monetary policy unchanged. On the 4 hour chart below of the EUR/USD we can see that the pair keeps oscillating around the 1.3600 level and the range has shrink, forming what appears to be a symmetrical triangle with the 55 EMA as support and the 200 EMA as resistance.

On the symmetrical triangle formations price tends to breakout in the direction that the price was having coming into the pattern. However, it would be wiser to wait for the breakout and then the pullback before trying to open a position. Therefore, even though the volatility has dropped, we may get an opportunity to enter on this pair if we patiently wait for the breakout.

The USD/CAD nears the 55 EMA on the Weekly chart.

The US dollar had been weakening versus the Canadian dollar since last week and it looks like it will continue with its downtrend for this week. However, we must be careful with the current drop on the pair, because it is nearing the 55 Exponential Moving Average on the Weekly chart, just as we see it on the chart below. The 55 EMA may not be too dependable on the lower timeframes, but on the higher timeframes like the weekly chart, this EMA may act as a very good support or resistance level. Therefore, we must pay attention to a possible visit of the price to the 55 EMA on the Weekly chart, because we may see a bounce from that zone to the upside.

Breakout and pullback on the GBP/USD to the 1.7000 level.

The Pound versus the Dollar has be gaining a lot of ground lately and has reached a 5 and a half year high at the 1.7062. On the 4 hour chart below we can see that the 1.7000 level was acting as a good resistance for quite some time, but the pair finally broke it and reached the 1.7062 from where it started retracing today.

We can clearly see that a breakout and pullback pattern has formed and the 1.7000 could act as a support now. Therefore, a visit to the 1.7000 could make the price bounce back to the upside and give us a possible long entry. For this reason we must pay attention to that possible visit.

Will the GBP/USD break or bounce from its historic high at the 1.7040 level?

The Pound continues to strengthen versus the Dollar after the press conference by the Federal Reserve of the United States and reaches its high from august, 2009 around the 1.7040 level, just as we see it on the monthly chart below of the GBP/USD.

Additionally to what the FED said yesterday, the Bank of England has made some comments about a possible interest rate hike in the United Kingdom. If this happens, then the BOE would be the second major central bank to raise its interest rates after the Reserve Bank of New Zealand. That is why we are seeing the GBP/USD pair reach this peak, but we cannot be too sure if it will break it to the upside.

For now, it is possible to see a bounce to the downside from this zone, due to the fact that the pair has been over-extended to the upside and investors may take some profits off the table. However, if the greenback keeps weakening and the BOE raises its interest rates, then we could see a breakout of this level to the upside.

Possible confirmation of the Double Bottom formation on the EUR/JPY.

A Double Bottom formation is a bullish reversal chart pattern where the price visits two times the same support area and bounces to the upside changing direction. On the four hour chart below of the EUR/JPY we can clearly see a well-defined Double Bottom formation.

First, the price drops to the support level at the 137.71 and bounces to the upside when the bulls come in and try to take the price higher, but then the bears take control of the market again and have the price drop to the 137.71 for a second time. From this point on the price goes back up and reaches again the resistance at the 138.55 creating the neckline or confirmation line.

If we see two or more bullish candles above the 138.55 level, then we can say that the breakout has been confirmed. But we should patiently wait for the pullback to this same level of the 138.55 for a possible long entry. Therefore, we should pay attention to this pair, because it may present us with a very good opportunity to enter the market.

The US Dollar nears the 13.13 level versus the Mexican Peso.

An incredible rise of the US Dollar versus the Mexican Peso after the inflation data out of the United States came out higher than expected, raising the odds of seeing more stimulus cuts by the FED and probably having an interest rate hike sooner than expected. The economic stimulus that the FED had been implementing has helped emerging market currencies like the Mexican Peso and the Brazilian Real, but now that that stimulus is being cut down, these currencies are feeling the heat and have been dropping versus the greenback substantially.

As we can see on the daily chart below of the USD/MXN, the pair is getting closer to the 13.1300 psychological level, which has been a very good resistance in the past. A visit to that level may give us a bounce to the downside and if that happens and the pair retraces back to the 200 Day Exponential Moving Average, blue line, then we may see a bounce to the upside from there.

Double Top on the NZD/USD?

The Kiwi holds on to its gains versus the Dollar and has visited two times the 0.8700 level, just as we see it on the daily chart below of the NZD/USD, courtesy of the Forex Broker Activtrades http://www.activtrades.co.uk/. We can see on the chart that on the second visit of the price to the 0.8700, the pair tries to bounce to the downside. We cannot be completely sure if the pair will complete a Double-Top formation, which is a bearish reversal pattern. We still need to see confirmation of this pattern by a breakout of the 0.8643 level to the downside, which is the trough of the two peaks forming the “double top”. If we see a breakout to the upside of the 0.8700 level, then we should wait for confirmation of such breakout and then the pullback to this same level for a possible long entry.

Attention to a possible visit of the GBP/USD to the 170.00 level.

The Pound remains strong today due to the comments by the Bank of England with respect to a possible rate hike sooner than anticipated. This has caused the GBP/USD to spike up and get close to the 1.7000 level. A visit to that resistance level could give us a bounce to the downside, due to the fact that about 40 pips higher we have a historic high from May, 2009. Therefore, this zone could be a very good resistance area for the pair. Let’s see if we get a visit for next week.

The New Zealand Dollar gets to the 0.8700 level.

The Kiwi keeps its bullish momentum, supported by the recent interest rate hikes by the Reserve Bank of New Zealand. The market had been expecting for a few months now that the RBNZ would be the first major central bank to raise its interest rates. Yesterday, the RBNZ raised its interest rate from 3.0% to 3.25%. This has caused the NZD/USD pair to shoot up from the 0.8500 level, break through the 0.8600 level, and get to the 0.8700 level. From the 0.8700 level there is a good probability of seeing a bounce to the downside, due to the fact that this area has been a very good resistance zone in the past. In case of seeing a breakout of the 0.8700 level, then we should wait for the pullback for a possible long entry.

Will the EUR/USD reach the 1.3500 level?

The Euro continues falling today, but at a lower rate as we can see it on the 4 hour chart below of the EUR/USD. The recent fundamental data out of the United States has raised the probabilities of an interest rate hike by the Federal Reserve sooner than anticipated; this has caused the Dollar to gain strength. On the other hand, the European Central Bank has provided more economic stimulus to the Eurozone, causing the Euro to weaken. This is why we are seeing the EUR/USD in a sustained downtrend.

The next support level for the pair is the 1.3500 from where it may stall or try to bounce to the upside. There could be a lot of buy orders pending at that area and that could prevent the pair from going lower. However, if the fundamentals from the U.S. keep coming out better than expected, then the yield on the U.S. treasuries may widen further and cause the greenback to gain more strength. This in return could cause the EUR/USD to break below the 1.3500 level.

The Pound falls, but it stays within the recent range.

The Pound has been retreating versus the Dollar during today’s session as we see it on the daily chart below of the GBP/USD, courtesy of the Forex Broker Activtrades http://www.activtrades.co.uk/. On this same chart we can also see how during the past few days the price has been oscillating around the 1.6800 level, waiting for some type of fundamental reason to move. Today’s fundamentals out of the United Kingdom were mostly in line with expectations, but the GBP/USD still falls on Dollar strength. If the price continues falling, then we should be attentive to a possible visit of the support at the 1.6700 level from where it may bounce to the upside.

A wider look at the EUR/USD.

When a currency pair or any other trading instrument stays in a prolonged consolidation, it is better to move to higher timeframes in order to see the bigger picture. Since the EUR/USD has stayed in a consolidation for so long, we have decided to take a look at the weekly timeframe. On it, we can see that the pair has found a very good support at the zone between the 1.3500 and the 1.3600. We may still see a bounce from this area to the upside, but if the price keeps falling, then the next support is going to be the 200 period Exponential moving average around the 1.3415 level.

Excellent bounce to the downside on the Kiwi from EMAs confluence.

An EMA confluence is an area where two different Exponential Moving Averages are sitting on two different timeframes. For instance, on the image below we can see that the 55 Exponential Moving Average is right on the 0.8550 level on the NZD/USD daily chart. We also see that the 200 Exponential Moving Average on the 4 hour chart is on the same level of the 0.8550. This is what we call an EMA confluence and these zones usually become very good support or resistance areas.

In this case, the EMA confluence has acted a very good resistance zone for the NZD/USD and we can clearly see how the price stopped at that level and bounced to the downside from there. Now the price has come back to the 0.8500 level and it is stalling at that zone. We must be on the lookout for this type of confluences, because they could provide us with very good entry opportunities.

The EUR/USD returns to the 1.3600 zone.

The European Central Bank has cut its interest rates and for the first time in its history, it has implemented negative interest rates during today´s announcement. This is an attempt by the central bank to stimulate the economy and make the inflation levels go up. This is what caused the Euro to drop versus its major counterparts, especially versus the Dollar. But we also see on the daily chart below of the EUR/USD that the price has come back to the levels previous to the news release. Most probably, the market had already priced in the actions by the ECB and probably the Euro does not deserve to be at such low levels.

However, tomorrow we have the Non-Farm Payrolls report out of the United States and if the reading comes out better than expected, then we may see the Dollar strengthening and most probably the Euro will keep losing ground versus the greenback. 

Will the NZD/USD reach the 200 Day Exponential Moving Average?

The Kiwi has continued its fall versus the US Dollar after the greenback gained some strength supported by the better than expected reading on Factory Orders out of the United States. At the moment it seems like the NZD/USD is heading towards the 200 Day Exponential Moving Average just as we see it on the daily chart below, around the 0.8420 level.

The 200 Day EMA could act as a strong support or resistance level and that is why we should be attentive to a possible visit of the price to that zone, because we may get a bounce to the upside from there and may be the opportunity for a possible long entry.

The Pound stays strong versus the Yen and breaks above the 171.00 level.

The Yen has been weakening today versus most of its major counterparts due to the strong Chinese fundamentals and merger and acquisition activity in Japan, which translates into more outflow of capital from the land of the rising sun. China was showing a lot of weakness lately on its economy, but today’s manufacturing reading was the highest it has been in five months. This has caused investors to leave the Yen and search for higher yielding assets.

That is why we see on the 4 hour chart below of the GBP/JPY, courtesy of the Forex Broker Activtrades http://www.activtrades.co.uk/, that the pair has broken the 171.00 level to the upside and it is attacking the 200 period Exponential Moving Average (blue line). From this point on, the best thing to do is to stay patient and wait for confirmation of the breakout and then the pullback to the 171 or 200 EMA for a possible long entry.