Daily Analysis 2012-07-31

Wall Street opened the trading week on the red territory as NASDAQ shed 0.41%. Dow Jones and S&P 500 lost respectively 0.02% and 0.05% and this indicates for a slight correction to last week's rally. Investors will focus today on consumer confidence data as well on personal spending and personal income data.

EUR/JPY

The Euro is clearly overbought after the sharp rising last week. The currency made a bearish candlestick in the daily chart of EUR/USD and if it slides under yesterday's low, it will ibe an indication for a possible bearish reversal. The Yen, on the other hand, strengthened against the USD yesterday and slid under the important support at 78.25. Therefore, the pair EUR/JPY made a bearish reversal as well. The Euro got the resistance of the 20 EMA on Friday and as a result, a red candlestick appeared in the daily chart. The bullish correction helped the Euro to correct approximately 50% of the recent bearish session, which means that the pair reached proper levels for a bearish reversing. In order to resume strengthening against the Euro, the Japanese Yen will have to break down and close under yesterday's low. If it succeeds, it might strengthen to the level of 94.0 against the Euro.

AUD/JPY

The Australian dollar is currently in a middle of a strong bullish movement against the USD. After it got a strong support at 1.025, the currency rose nearly 250 pips against the USD. The Aussie is now facing the resistance at 1.05 and if it successfully breaks through, it might jump towards 1.07.

The AUD is getting stronger against most of the currencies, including the JPY. Despite the fact that the JPY is gaining power against the USD, the AUD managed to force a break up pattern on the pair's daily chart. The level of 82.35 is resisting the pair and a strong break up might trigger many automatic orders that can lift the pair towards 84.75.

AUD/NZD

We analyzed the pair a week ago and mentioned that it reached a strong resistance in the daily chart. As we expected, stochastic high levels prevented additional break up and the pair corrected down to the support of the 200 SMA. Stochastic levels still indicate for overbuying situation, which means that the bearish correction might continue. If the NZD break down the current support, the pair might fall to 1.285. However, a break up of the 3-days high at 1.30 might push the pair above the resistance at 1.3050.