EURUSD recovered from the post-ECB slump, but the rally is already showing signs of weakness. Resistance at 1.11 proved to be strong, and a negative RSI divergence can be seen on the H4 chart. Given the weak outlook for the economy of the Eurozone and lower rate expectations, the Euro could struggle in the near-term. Traders will be looking closely at 1.0930 support, as a break below could trigger further position covering from EUR longs.
Another currency pair that might be worth keeping an eye on is EURJPY. Geopolitical tensions are increasing again, which could make traditional safe havens like the Japanese Yen attractive again to currency traders. EURJPY is still within a long-term downtrend and recently failed at the important 120.00 resistance level. Should markets switch back to risk-off, the downtrend could resume, with 116 the next major support level to watch.
GBPUSD remains volatile as the uncertainties around Brexit are still high. The 1.25 resistance level is the next significant hurdle for GBP bulls, as it is also the 38.2 % Fibo of the March-August decline. A clear break above may lead to further position covering from GBP bears and trigger momentum buying. Resistance could then be seen at 1.2680-1.27.
The stock market rally inspired Gold bulls to lock in some of their gains, which led to a decline in late August followed by a consolidation. However, today was another reminder that investors remain on the edge and sentiment can easily turn sour overnight. XAUUSD could therefore stay in demand in the near-term, with bulls eyeing $1520 as next obstacle, followed by the recent high at $1557.
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In January the Fed needed to put the Taper Genie back in the bottle; now they need to convince the short end crew to back off repricing the Fed Funds strip