Gold Breaks Above 1200, USD/JPY Remains Weak

Daily Forex Market Preview, 11/02/2016

While the US Dollar showed signs of strengthening into Fed Chair, Janet Yellen’s testimony yesterday the Greenback trimmed the intraday gains to settle lower. Gold prices managed to break above the $1200 handle while USDJPY was seen trading below 113. EUR/USD remained strong to the upside but is looking to post a likely correction lower if prices break out from the rising wedge pattern. On the economic front, there is not much of data to go by today except for Janet Yellen’s second day of testimony.

EUR/USD Daily Analysis

EUR/USD (1.12): EUR/USD closed with a long legged doji candlestick pattern yesterday after testing lows of 1.116. Price action remains caught within the 1.12 – 1.13 level of resistance to price action currently trading just below the 1.13 handle. O the 4-hour chart, the rising wedge pattern remains in play and if the previous high is not breached near 1.1336, a potential move to the downside could be anticipated, with a test of support to 1.11 very likely which will be confirmed on a breakout from the rising wedge pattern. The median line plotted on the recent price action also showed a modest lower high being formed but the price needs to follow through with the 4-hour Stochastics printing a bearish divergence currently.

USD/JPY Daily Analysis

USD/JPY (112.6): USD/JPY erased intraday gains yesterday and remained in a bearish mode. Prices closed lower below the 113 handle. 112 is the next major level of interest for any hopes of a correction to the upside, failing which price action could continue to push lower. The 4-hour chart shows the down sloping price channel which could indicate a move higher if prices manage to break out of it. For the moment, USD/JPY remains weak with 112 very likely to be tested in the near term.

GBP/USD Daily Analysis

GBP/USD (1.45): The British Pound pushed higher after finding minor support off the 1.443 support. The bounce saw prices rally to test the 1.457 where a minor support is now being tested for resistance. If GBP/USD remains below 1.457, price action could decline lower with 1.435 – 1.43 coming in as a level of support that could be tested. The 4-hour Stochastics oscillator is also failing to confirm the highs indicating a potential correction to the downside if prices fail to break above 1.457.