Euro keeps taking hits from various fronts like US data to the speculation that the QE from the ECB may come this week. The divergence between the US & Eurozone economies is getting more and more clearly reflected in the respective currencies.
Euro (1.3123) crashed exactly from our resistance at 1.3220 to reach our medium term target of 1.31. Now it is very close to the long term support zone of 1.3050-3000 though no sign of strength is visible. Let’s see if any short covering emerges from these levels.
Dollar-Yen (104.17) is close to hit a new 7-month high above 104.26 but still needs a break above 104.50 to gather bullish momentum for reaching higher levels. The grinding price action without any kind of directional move in Euro-Yen (136.69) actually shows the relative uniformity between Euro & Yen as both weakened simultaneously. The pair remains weak below 138 and the range of 136-138 may sustain for a few sessions more.
Pound (1.6596) is stuck within a very narrow range of 1.6540-1.6620 and even a break above 1.66 could not boost the pair. The downtrend remains firm and any bounce may face selling pressure from 1.6700-50 levels.
Aussie (0.9338) is testing the August high at 0.9375 levels but the lack of momentum doesn’t promise much more immediate upside. A failure to break above 0.9375 may drag it down towards 0.9280-50 levels once again.
Gold (1286.75) is trading lower after a short upward correction from 1271. We may see a rise towards 1300 before falling back to 1280 in the near term while the longer term remains bearish. Gold-WTI ratio (13.42) has fallen from resistance at 14 but may bounce back from 13.3-13.4 levels to target 14.5-15 levels.