Daily Technical Analysis. Friday, October 20
The Asian trading session on Friday saw a slight decline on the single currency of the region of the European Union after it rebounded for the second session in a row yesterday.
“We have followed the Eurozone economies,” ECB President Mario Draghi said at the European Central Bank (ECB) Conference in Frankfurt. “We must adopt economic reforms of common interest to all the Eurozone countries. These reforms must be fair and equitable,” he said.
Despite recent gains, the pair still has to break above the 1.1850 and 1.1880 resistance levels to sustain its rally. A drop below support at 1.1800 levels would affect the recent uptrend and cause the pair to proceed on a sideways movement.
The British Pound fell on Friday to reach its lowest level in two weeks, amid concerns about Britain’s exit from the European Union, as well as markets waiting for President Donald Trump to appoint a new, or re-appoint the incumbent Head of the Federal Reserve Bank.
Reports that British Prime Minister Theresa May will participate in Brexit talks with European Union leaders is raising tensions in the markets as the talks have so far failed.
On the other hand, negative Data on Britain’s Retail Sales in September fell to 0.8% from 0.9%, reflecting a decline in Household Spending.
Technically, selling pressure continues to prevail on the pair as it continues on a downtrend. Any break below the support levels near 1.3090 will consolidate the declines and may cause a test of the 1.3025 levels. A bounce back above 1.3140 resistance would ease the selling pressure temporarily.
The US Dollar rose against the Japanese Yen on Friday, hitting a two-week high as selling pressure on the Yen followed comments by Finance Minister Taro Aso, who has encouraged Japanese Companies to increase spending and investment in the Japanese Economy. The weakness of the Yen was also fostered by the Dollar recovery following better than expected Data released yesterday from the US Economy.
Technically, a rebound in buying would reinforce the previous bullish trend. The pair’s success in breaching near resistance levels at 113.20 will boost optimism and push the price test to 113.40 levels. However, the return of prices below the resistance level of 113.00 would temporarily ease the optimism.
A buy back would strengthen the previous bullishness of the pair. It’s success in breaching near resistance levels at 0.9835 will enhance optimism and push the price test to 0.9850 levels. A return of prices below the 0.8000 resistance level would temporarily ease the bias.
Gold prices fell during the Asian session on Friday, after yesterday’s rally. This decline in Gold prices comes as the Dollar strengthened against its major counterparts, following the rise in the yield on Government Bonds.
The US Dollar and the 10-year US Treasury Yield rose on Friday after the US Senate voted to approve the budget outline, paving the way for Republicans to get approval for the Tax Cuts without Democratic support.
Technically, the resumption of selling pressures on Gold’s price movement will strengthen the previous bearish trend. Breaking below the support levels near 1282 will consolidate the declines and may proceed to test the 1277 levels. However, the return of prices above the resistance level at 1286 would temporarily ease off selling pressures.