The Euro rose against the Dollar for the third day in a row as it continued to record limited gains due to investors’ focus on developments in the Federal Reserve Meeting and Economic Data releases.The recovery follows the Federal Reserve meeting, which indicated a continued tightening in US Monetary Policy and a gradual increase in Interest Rates.
Market Analysts are also waiting for the release of the Jobs Report Data on the US Economy due to be released this Friday, which could initiate major market volatility. Technical reading of the EURUSD pair shows that prices are trying to consolidate after the recent strong rally, with no signs of a general upward trend change. The break of support levels at 1.2410 would allow prices to fall further and may test 1.2380 levels. A breach of near resistance levels at 1.2430 would however re-introduce a bullish trend and possibly test 1.2450 levels.
The Sterling was on a sloping range during the Asian session against the US Dollar following developments and economic data releases on Wednesday in addition to the meeting of the Federal Open Market Committee (FOMC) in Washington.
Technically, a rebound of the GBPUSD pair could reinforce the previous bullishness. The pair’s success in breaching near resistance levels at 1.4230 will boost optimism and push the price test to 1.4280. A return of prices below 1.4160 resistance should temporarily ease the bias.
Despite the stability and fluctuation of the US Dollar against its major counterparts, the Dollar is strengthening against the Japanese Yen following the rebound of Asian Stock Indexes reducing demand for the Japanese Yen as an alternative investment.
Although the PMI Data for the Japanese Economy improved in January, with a real reading of 54.8, better than the previous forecast of 54.4, technical reading still shows that prices are moving within the framework of a positive correction toward the general bearish trend.
Resistance levels at 109.45 are still considered the most important short term levels and these levels are likely to cause a bearish trend in the market while at the same time any indication of a change in direction in the short term would negatively affect the movement of prices.
Gold prices fell slightly during the Asian trading session on Thursday as a result of the Fed Meeting yesterday, which increased the chances of a gradual increase in US Interest Rates.
Gold prices reacted positively yesterday following the Bank’s Meeting due to the limited Dollar appreciation. Further gradual interest rate increases will help to increase demand in the Bonds market, which will in turn, negatively affect Gold trading and reduce the demand for the metal as a safe haven and alternative investment.
Despite recent market rallies, prices still have to break above stability levels at 1345 and 1348 in order to establish an uptrend. A drop below the near support levels at 1343 would affect the uptrend however, and cause the market to proceed on a sideways movement.