We expect Draghi to support the euro | 08 May 2014

Euro

From Janet Yellen we could expect a moderately positive comments about the U.S. economy future as the first quarter of this year was a disaster. Still it is necessary to forget about that and continue to work, moreover the macroeconomic reports for April indicate the exit of winter “pit”.

The EUR/USD broke out of the narrow range to the upward direction and rose up to the resistance around 1.3951, just a little short from the high at 1.3966, tested in mid-March. Undoubtedly, this growth is a positive factor for the single currency, but the “bulls” should still be on guard, as 1.3966-1.4000 resistance area can be daunting for them and is a good level to open the short positions.

The support levels are 1.3890- 1.3910, and the resistance levels are 1.3960 - 1.3990.

MACD is pointing up, indicating the current uptrend movement rates.

Trading Recommendations

Testing the 1.4000 psychological level looks possible. Falling down below 1.3800-1.3772 gives a reason to expect a new top formation.

Pound

The pound/dollar, in the absence of the reports from the UK, will stay in a consolidation near the resistance level 1.6975. The investors are still positive on the British currency and will try to storm the maximum value of 2009 which is located at the level 1.7041. Still the geopolitical risks may prevent the “bulls” from following the plan.

The pound/dollar rushed upwards, conquering new high. As a result it tested the level 1.6996 which is currently able to provide the strong resistance. Attempts of falling are limited by the support at 1.6969. The support levels are 1.6880 - 1.6910, and the resistance levels are 1.6980 - 1.7000.

MACD is pointing up, indicating the current uptrend movement rates.

Trading Recommendations

The pound may test 1.7000 or even break it, but there should be beware of false breakouts, as the pair is overbought, and similar levels are attractive for taking a profit and opening positions in the opposite direction.

Yen

In the absence of important macroeconomic statistics from Japan and the United States all of the market participants' attention will be focused on the Fed chairman speech results. The dollar/yen will be able to restore some of the lost ground.

The dollar/yen continued to decrease and tested the support around 101.50. Kickbacks are limited by 101.76. Today, the USD/JPY is falling again, although not very confident.

The support levels: 100.80- 101.00, and the resistance levels: 101.70- 101.90.

MACD is pointing down, indicating the current downtrend movement rates.

Trading Recommendations

The 101.22 breaking adds some negative to the dollar and leads to the support 100.68 testing, the loss of which would confirm the downward correction development. To return the control the “bulls” need to overcome the 103rd figure.