The mood has turned cautiously positive today after Spain's successful auction, in addition to the better than expected sentiment among institutional investors within the euro zone. From the U.S., we have seen mixed data from the housing sector, as building permits soared to nealry 750,000 from 720,000 in February, while housting starts plunged by 50,000 to 650,000 in March.
Further important releases are due within minutes from the U.S. and Canada; mainly industrial production from the U.S., and Bank of Canada's rate decision.
The EUR/USD found resistance at the descending trend line of the recent bearish wave around 1.3150 area; the pair is attempting to the downside again now trading around 1.3128. Stochastic looks like topping within overbought area, thus we expect downside pressure to resume or at least a pause of the current rally below 1.3200 as Spain's long term bond auction on Thursday remains the main concern. The pair has formed a potential falling wedge pattern, if we witness a break above the resistance of the pattern at 1.3150-1.3160 further upside towards 1.3250-1.3300 is probable.
The GBP/USD rebounded after testing the ascending support of the rising wedge pattern to retest around 1.5975 resistance. The pair has gone overbought as seen on Stochastic, while trading near 1.6000 juncture; thus we may see the downside pressure resume soon, taking into consideration that a breach above 1.6000 may lead to a retest of 1.6060 high. In the near term, the main barrier to the downside is ascending support of the wedge pattern in addition to 1.5800 horizontal support, breaking below 1.5800 will open the door to 1.5600 one more time.
The USD/JPY settled below the 50-days SMA, however it continues to struggle with 80.50 major pivot; meanwhile, a bullish divergence is seen on Stochastic indicator, thus we still anticipate a rebound from areas among 80.50-80.00 within the upcoming short period, targeting a retest of the opposite side of the channel and 81.80.
After touching the top of the descending channel, gold reversed course to retest the breached descending resistance of the falling wedge pattern and currently heading upwards. The bullishness is favored over the short term and so long as 1640.00 remains intact, eying another test of the resistance of the channel currently around 1675.00, taking 1675.00 shall clear the way towards 1697.00 swing high.