Daily Analysis 2012-08-13

EUR/USD

Many traders expected the Euro to rise on the background of the bullish momentum in the stock markets. However, investors decided to take advantage of the recent rising in order to sell the Euro. The currency reached a strong support at 1.24 and despite the break up of the US indices, the Euro failed in breaking through. Stochastic levels are still high, which means that the currency might continue falling towards 1.217-1.22. Nevertheless, the tails that extend from Friday's candlestick indicates for a possible bullish reversal.  The Euro gets support at 1.2240 and if it crosses above Friday's high, it might show another attempt of breaking through 1.24.

GBP/USD

As we estimated on the previous weekly analysis, the pound continued to be traded between the support at 1.545 and the resistance at 1.57. The currency narrowed the range last week, as a strong support appeared around 1.5550. The pound close on the resistance at 1.57 as it looks ready to break through. If it succeeds, the pound might jump upwards to 1.59. However, the 200 SMA waits just above 1.57 and it might be a tough obstacle for the pound. In case of a failure, the currency might slide to the channel's support at 1.545. Investors will look forwards to Wednesday, as the MPC meeting minutes will be revealed.

USD/JPY

This pair keeps stamping, as it could not break through neither the resistance at 78.85 or the support at 78.0.  The main reason for this unclear trend is the contradicting forces of each currency, in which the USD is traded against the general trend. Trading the pair when it has unclear direction is extremely dangerous. Therefore, one should wait until the pair breaks up or breaks down. According to the bearish trend that appears on the daily chart, the Yen is likely to break down. If it does, we might see it around 77.0.