EUR/USD: sentiment leads, quiet session ahead

EUR/USD Current Price: 1.0829

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The American dollar traded generally lower across the board, although market lacked volume this Monday, and majors remained confined to tight intraday ranges. The EUR/USD pair advanced up to 1.0844 in the American afternoon, meeting selling interest around the 38.2% retracement on the December rally. The recovery of the common currency was supported by a pullback in oil's prices as the commodity was unable to hold into early gains, on renewed fears of a worldwide glut, after Iraq reported a production of as much as 4.13 million barrels a day during December. Early in the European session, Germany released its January IFO survey, showing that confidence remains sluggish in the country, as business confidence dropped to 107.3 from a revised 108.6 in December. In the US, the Dallas FED Manufacturing business index fell by 34.6, in January, following a 20.1 drop in December. 

The pair closed in the green, once again holding in the base of its latest range, the 1.0780/1.0800 region, and the 50% retracement of the above-mentioned rally. Short term, the 1 hour chart shows that the price is above a bullish 20 SMA, while the technical indicators have turned lower, but remain above their mid-lines, indicating limited selling interest at current levels. In the 4 hours chart, the price was capped by a bearish 20 SMA, around 1.0840, while the technical indicators diverge from each other within bearish territory, giving no clear clues on what's next for the pair. Some follow through above 1.0845, however, should favor a continuation rally up to the 1.0910/25 region, should the greenback remain under pressure. 

Support levels: 1.0780 1.0745 1.0710

Resistance levels: 1.0845 1.0890 1.0925 

EUR/JPY Current price: 128.42

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The EUR/JPY pair showed little progress this Monday, consolidating around its recent highs, but still unable to clearly break above the 128.50 level. The Japanese yen spent the day in a tight range against most of its rivals, as in spite of oil's retrace, stocks traded flat around their daily openings for most of the day. The short term picture for the pair is mild bullish, given that the price holds above its 100 and 200 SMAs that anyway remain horizontal in the 127.80/90 region, while the technical indicators stand flat around their mid-lines. In the 4 hours chart, the Momentum indicator heads higher above its 100 level, while the RSI hovers around 56, and the price develops above a bearish 100 SMA, all of which supports some further gains for this Tuesday, on an upward acceleration above the mentioned 128.50 level. 

Support levels: 128.00 127.60 127.25 

Resistance levels: 128.50 128.90 129.40 

GBP/USD Current price: 1.4245

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The British Pound was unable to attract investors, trading a few pips both sides of its daily opening from most of the day against its American rival. The UK calendar has been empty this Monday, but on Tuesday, BOE's governor, Mark Carney, is due to  testify on the Financial Stability Report before the Treasury Select Committee, in London, anticipating some action for the local currency. The GBP/USD pair 1 hour chart however, shows an increasing bearish potential, given that the price has been below a mild bearish 20 SMA for most of the day, while the technical indicators lack directional strength within bearish territory. In the 4 hours chart, the price has been finding some support around a slightly bullish 20 SMA, currently around 1.4230, while the Momentum indicator retreats from overbought territory and the RSI heads south around 49, in line with the shorter term perspective. The daily high was set at 1.4280, and a break above it should deny the downward potential, and favor a retest of the 1.4360 high posted last Friday.

Support levels: 1.4230 1.4190 1.4160

Resistance levels: 1.4280 1.4325 1.4360

USD/JPY Current price: 118.56

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The USD/JPY retreat from the 118.90 region, but the slide was limited by buyers surging at 118.16, the daily low. Trading mid-range, the Japanese yen remains weak after BOJ's Governor Kuroda stated in Davos, last Saturday, that the Central Bank  “won’t hesitate adjusting policy, including easing policy, if necessary to achieve our 2% price target,” fueling speculation more easing will be announced during the upcoming meetings. The technical picture shows that the upside is still limited, given that in the 1 hour chart, the 100 and 200 SMAs converge around 117.60, lacking directional strength, while the technical indicators stand flat below their mid-lines, also heading nowhere. In the 4 hours chart, the Momentum indicator continues retreating from overbought readings, while the RSI heads slightly lower, but around 60. The 118.90 stands for the 38.2% retracement of the 123.54/115.96 decline, and it would take a clear break above it to confirm a continued advance during the upcoming sessions, up to 119.70.

Support levels: 118.40 118.15 117.80 

Resistance levels: 118.90 119.35 119.70

AUD/USD Current price: 0.6981

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Commodity-related currencies shed some ground at the beginning of the week, following oil's prices retreat, and the AUD/USD pair lose the 0.7000 level, having traded as low as 0.6961 during the US session. With a bank holiday ahead in Australia, and no macroeconomic data scheduled in the region, the upcoming session will likely continue depending on oil and risk sentiment. In the meantime, the pair presents a tepid bearish tone in the short term, given that in the 1 hour chart, the price is below a bearish 20 SMA, while the technical indicators head lower below their mid-lines. In the 4 hours chart, the price has managed to hold above a bullish 20 SMA, while the RSI heads north around 53, although the Momentum indicator continues heading south towards its 100 level. Selling interest will likely appear on a  test of the 0.7040 region, while further declines are expected below the daily low, also a strong static intraday support. 

Support levels: 0.6960 0.6920 0.6870   

Resistance levels: 07000 0.7040 0.7075