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Overall, the currency market retraced some of the recent moves during the Asian session, but it is expected that the market would resume moving higher against the dollar later in the day, on risk-tolerance. The Asian economic calendar was almost empty, but the European one holds a number of important reports, which are likely to influence in one way or another the fx market. The majors are looking to build strong momentum on Tuesday, as most pairs are sitting near important swing areas.
The Euro (Eur/Usd) lost approximately 30 pips tonight, during the Asian session, after the pair bounced from the 1.4000 resistance area. Around the same area, the 20-day moving average can also be found, which has acted as a major swing area over the course of the last month.
The Pound (Gbp/Usd) bounced from the 20-day moving average on Monday, and formed a long bullish pin-bar on the daily chart. During the Asian session, the pair retraced some of it, but most likely, the near-term trend is to the upside. In order for the pair to move higher, it would have to break above the trend-line that connects the 06.30 and the 07.09 highs. During the European session, a release is expected to show that inflation stood at 1.8% in June, much higher than in the U.S. or in the Euro-area.
The Aussie (Aud/Usd) is struggling to take out the 0.7850 area, the same place where the pair topped over the last three days of trading. To the upside, the swissy is heading towards a strong resistance area it seems, formed by the 20 and the 50-day moving averages.
The Cad (Usd/Cad) managed to break below the 20-day moving average on Monday, helped by the strong declines posted throughout the U.S. session, but the pair has re-tested that resistance area during the Asian session. Over the last few months of trading, crude oil and the cad have had a strong correlation, but it all seems lost for now.
The Swissy (Usd/Chf) remains trading near the 20-day moving average, which appears to be the main swing point of the last few weeks of trading. In order for the swissy to move anywhere decisively, the pair has to first be able to break free from the 1.0750-1.0900 area.
The Yen (Usd/Yen) is currently trading near the high of the last two days of trading, after bouncing from the 91.80 support area. Moreover, the daily chart shows that the yen has formed two consecutive pin-bars, which are usually interpreted as reversal signs.
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