With the US Federal Reserve holding rates steady yesterday and lowering its Fed funds rate forecasts to two rate hikes in 2016, aligning with the market expectations, the US Dollar is likely to remain weak in the near term, which should, in turn, see the Euro and the Yen strengthen. The British Pound could, however, remain the exception as we expect to see another test down to 1.40 levels.
EURUSD Daily Analysis
EURUSD (1.12): Following a small bodied candlestick pattern the day before, EURUSD closed on a bullish note yesterday. Prices are back to the ECB highs of 1.120 resistance which could see another leg of consolidation come in within the 1.13 - 1.12 resistance zone. On the 4-hour chart, the price action still remains a bit doubtful as the Stochastics points to a bearish divergence to the modestly higher highs in price. Support at 1.113 - 1.1105 will be the initial level of interest if the upside is capped but a decline to 1.10 could confirm the much-needed correction.
USDJPY Daily Analysis
USDJPY (112.02): USDJPY continues it decline with prices now testing the 112.0 support level. A break below this support could open strong declines lower towards 111.0. On the 4-hour chart, prices still remain flat with no bias in sight. Prices have attempted to breakout from the descending triangle pattern but will little success failing to clear the 114.7 - 114.35 resistance. With 112.5 support being cleared, USDJPY will see potential declines towards 111.310.
GBPUSD Daily Analysis
GBPUSD (1.423): The British Pound managed to post a strong reversal yesterday following a decline to the 1.41 handle. With prices trading above 1.40 the bias remains to the upside for the resistance at 1.43. Currently, the GBPUSD's rally has seen a retest back to the breakout of the trend line. If this is validated GBPUSD could resume its declines and test the 1.4025 - 1.40 support level.
Gold Daily Analysis
XAUUSD (1257): Gold prices are back above the $1250 handle and closed yesterday with a strong bullish price action coming after the previous day's doji pattern. We can expect Gold to continue consolidating within the 1275 - 1250 levels unless there is a break of the 1250 support in which case, a dip back to the previous support at 1230 - 1225 is likely.