Daily Forex Preview for February 29, 2016. Dollar gains on upbeat GDP data

February 29, 2016

An upside revision to the US GDP for the fourth quarter sent the Greenback stronger across the board. However, market sentiment is currently pointing to a modest risk aversion with the Yen gaining in early Asian trading, which could, in turn, see the Euro attempt to post a recovery rally. End of month flows could also keep the US Dollar volatile on the last trading day of the month.

EURUSD Daily Analysis

EURUSD (1.09): EURUSD closed Friday with strong losses, as prices briefly fell below the 1.10 handle. The decline comes after nearly three days of sideways price action indicating a further decline to the downside on a successful close below 1.089. With prices trading in the support level of 1.095 - 1.093, EURUSD could be attempting a go at reclaiming the 1.10 support/resistance level. However, the upside momentum is capped with resistance at 1.113 - 1.1105 likely to hold the rally. Below 1.093, EURUSD could be looking at testing the previous lower support at 1.0835 - 1.0825.

USDJPY Daily Analysis

USDJPY (112.9): USDJPY rallied strongly after forming a doji pattern last week near 112 support. The support saw USDJPY rally towards 113 region but current price action is bearish with Greenback easing against the Yen. To the downside, a continued momentum could see USDJPY test 111.31 levels in the near term following the hidden bearish divergence formed on the charts. A test to 111.31 with a potentially higher low in the Stochastics could see a move to the upside on a close above 113 - 112.5 resistance. The upside target to 117 remains in place as long as USDJPY does not see a daily close below 111 – 111.31 support.

GBPUSD Daily Analysis

GBPUSD (1.387): GBPUSD closed bearish on Friday following Thursday's attempt at a bullish close. On the daily chart, prices are trading close to the lower median line which if supports the prices, a short-term bounce could be expected. Currently, GBPUSD has formed a doji on the 4-hour chart followed by a bullish close higher. A continuation to this could see prices eventually rise back to the 1.40 handle where resistance is previously established. The Stochastics on the 4-hour chart also points to a bullish divergence taking shape. Below the current lows at 1.387, GBPUSD could be at risk for a dip to 1.385.

Gold Daily Analysis

XAUUSD (1226): Gold prices continue to trade sideways with the 1200 support holding prices strongly. However, the strong consolidation is likely to give way to a strong momentum led rally or a decline. On the 4-hour chart, minor support/resistance is seen at 1230 - 1225 region. The median line connecting the recent price action shows Gold breaking outside the lower median line. With a near-term top formed at 1250 and a modest lower high being formed, Gold could remain range bound between 1230/1225 and 1200 region. The bias remains to the downside with the potential to test 1130 on a break below the 1200 support.

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