Daily Forex Market Preview, 2/12/2016

The US Dollar continued to remain weak with the Euro and the Yen benefiting from the safe-haven flows. Janet Yellen’s second day of testimony did not offer much to the markets with the Yen touching a year low below 112 while EUR/USD was seen trading back above the pre-QE levels of 1.133. Gold prices also kept up the prices with $1250 handle being tested yesterday. US retail sales numbers and UoM inflation expectations are due today which could see further volatility coming into the markets.

EUR/USD Daily Analysis

EUR/USD (1.13): The Euro remains bullish against the Dollar, after breaching the 1.13 handle. The strong rally off the 1.095 - 1.10 handle has seen a quick run up and it is likely that prices could risk a move lower. On the 4-hour chart, prices are now showing consolidation after the rising wedge pattern was formed. At 1.1335, EUR/USD has formed a series of spinning top/doji patterns which indicate exhaustion to the rally. Currently, following a doji candlestick pattern, prices are trading just below the 1.1335 resistance level. Failure to rally above this resistance could see a move down to 1.1130 - 1.1105 level of support. This correction should potentially see another leg higher. However, if 1.1130 - 1.1105 support fails, EUR/USD could be looking to sharper decline to 1.105 - 1.093.

USD/JPY Daily Analysis

USD/JPY (111.9): Price action remains bearish but with 112.00 being reclaimed, USD/JPY could be looking to a move higher in the near term. Prices briefly broke down below 112 support yesterday but failed to close. A higher close today or a close above 112 could signal a potential retracement. Besides the horizontal support, prices are also finding dynamic support off the lower median line and the steep price channel that was formed. While a pullback looks weak at this point, a break below 112 could signal further declines to as low as 110.

GBP/USD Daily Analysis

GBP/USD (1.44): GBP/USD remains to consolidate below the 1.4635 resistance and the 1.443 support. Prices tested the minor support and resistance level at 1.457 yesterday but failure to decline lower to 1.435 to establish support is likely to keep GBP/USD trading sideways. The bearish divergence remains in play which could see a correction to the lower support at 1.435 - 1.43 region. In the event prices break above 1.457, GBP/USD will need to break above 1.4635 in order to post new highs.

Gold Daily Analysis

XAU/USD (1242): Gold prices breached a new high yesterday as prices broke above the $1250 handle. However, prices were firmly rejected at the highs. The rather steep price action points to a potential risk of a downside move in Gold with the first minor trend line acting as the first line of defense. A break of this trend line could see a dip back to 1200, followed by 1130. Establishing support at 1200 could see further upside with 1250 coming in as a the initial level of resistance.