Last week the pair managed to break down the lower border of a narrow sideways range where it was consolidating for a while and significantly fell.
The pair was pressured by poor macroeconomic statistics from the US on the labour market and key indices. In addition, strong data from Japan added to pressure on the pair. Machinery Orders came out substantially better than forecasts at 10.7%.
This week attention needs to be paid to US data on the construction sector, Industrial Production and labour market in the US and to decisions by the Fed and the Bank on Japan on interest rates. Due to expectations of monetary policy tightening in the US and policy easing in Japan, the pair will be receiving support.
Support and resistance
The likeliest scenario is the pair’s growth towards the levels of 123.00, 123.75.
Support levels: 120.75, 120.40, 120.00, 119.80, 119.40, 119.00, 118.60, 118.00, 116.20.
Resistance levels: 121.30, 121.80, 122.10, 122.50, 123.00, 123.75, 124.10, 125.50, 125.70.
Long positions can be opened from current levels with the target at 123.70 and stop-loss at 119.80.