Failure to hold on to the gains made in the early part of the week near the $1300 level has seen gold prices continue to pull back following the doji pattern two days ago. A bearish continuation today could see further downside in gold ahead of the US ADP payrolls report and Friday’s non-farm employment data.
EUR/USD Daily Analysis
EUR/USD (1.14): EUR/USD tested the $1.160 handle yesterday but closed on a bearish note settling at 1.1496, indicating a near-term pullback to the upside. Support at 1.147 remains the immediate level of interest, a break below which could see EUR/USD extend its declines to 1.130. The bearish divergence on the daily chart points to a deeper pullback that will see EUR/USD test the 1.10 handle over the next few weeks.
USD/JPY Daily Analysis
USD/JPY (107.2):USD/JPY closed yesterday on a modestly bullish note, pulling back from the lows of 105.550. A continued upside momentum could see the recovery push USD/JPY towards 110.67 in the near term which marks a strong resistance level that was previously supporting prices. A break above 110.67 could see further bullish momentum in USD/JPY for a test to 117 - 116.21 resistance. Minor support at 106.565 is likely to be tested ahead of further gains to the upside. However, a break below this support could see USD/JPY either continue to consolidate below the support and the recent lows or extend declines lower.
GBP/USD DailyAnalysis
GBP/USD (1.45): GBP/USD closed in a bearish engulfing pattern on the daily chart after a brief test to the resistance high near 1.4743. Engulfing the past two sessions, the downside momentum could see GBP/USD test the lower support at 1.4425. As long as this support holds, which was the resistance neckline of the inverse head and shoulders patterns, GBP/USD is poised to the upside with further gains likely only on a break above the current resistance near 1.4743 - 1.4635. Below the support at 1.4425, GBP/USD could slip towards 1.4312 - 1.430 support.
Gold Daily Analysis
XAU/USD (1280.5): Gold prices are into their second day of declines following the doji pattern that was formed at the top end of the rally to $1300. The downside could see gold prices slip to 1275 support, but overall, gold remains well positioned to the upside above the 1200 handle. On the 4-hour chart, looking at the Stochastics, there is scope for 1275 - 1276 support likely to offer a short term bounce, but the upside is likely to be limited to the currently broken support at 1291 - 1289 which could be tested for resistance.