Intraday Market Analysis – US Dollar Seeks Support.
AUDUSD bounces higher
The US dollar softened over profit-taking after the Fed sped up tapering as expected. The pair has found support over the psychological level of 0.7000.
A break above the supply zone at 0.7170 is a show of strength from the buy-side, forcing the shorts to cover. An overbought RSI has limited the upward extension.
The 50% (0.7090) Fibonacci retracement level attracted some buying interest. Further down, the 61.8% (0.7060) level is the second line of defense. A rally above 0.7180 may send the pair to 0.7270.
USDCAD to test 4-month high
The Canadian dollar recouped some losses after November’s BOC CPI met expectations. Medium-term price action saw strong buying interest near the 30-day moving average (1.2610).
A break above the recent peak at 1.2850 indicates that the bulls have retained control. The RSI’s overbought situation has caused a brief pullback to let the bulls catch their breath.
The August high at 1.2950 is the last resistance before an extended rally would unfold. 1.2810 is the immediate support for the current pullback.
EURGBP consolidates gains
The euro recovers as traders wait for the ECB’s policy meeting later today. A rally above November’s high at 0.8590 has put the bulls back in the game. However, the RSI’s repeated venture into the overbought area has refrained buyers from chasing the momentum.
A drop below 0.8490 shows some weakness in the euro. A lack of support and a bearish MA cross may lead to an acceleration to the downside. 0.8460 would be the next target. The euro will need to reclaim 0.8550 to consolidate the rebound.
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