The US dollar fell across the board on Monday, opening with gap-lower against majors at the beginning of the week. Overall sentiment ahead of UK referendum turned positive, as the latest polls swung in favor of voters supporting staying in the European Union.

British pound benefited from fresh bullish sentiment and probed above 1.4600 mark in Asian trading, after week’s trading started with 125 pips gap higher.
Strong bounce moved sterling from dangerous 1.4000 zone, which was visited last week, sidelining mounting downside risk which was turning focus towards critical 1.3500 support zone, on Brexit fears.
Renewed risk appetite sent safe-haven Japanese yen and Gold, top winners of the last week, back into red territory.

Yen fell over 100 pips against the dollar and also lost ground against Sterling and Euro, after hitting fresh multi-month high at 103.50 vs the greenback and spot gold establishes below psychological 1300 handle, below which last week’s trading was closed.
The Euro also benefited on weaker dollar, hitting peak of Asian session at 1.1381, after opening with 50-pips gap-higher on Monday.
Fresh pick-up in risk appetite pushed US stocks higher, suggesting positive open of Wall Street on Monday, as Asian shares showed strong gains and European stocks started week with gains of over 3% in average.

Opinions on fresh positive sentiment are divided, as a number of analysts points that fresh rallies cannot be sustained, as uncertainty about Thursday’s historical referendum persists. However, current situation shows that immediate and strong downside risk for a number of major currencies has been sidelined, as markets enter the last few days ahead of British referendum.

Today’s highlights

Absence of economic indicators on the calendar for Monday suggests that markets will be moved mainly by technicals today.
Fed’s Chair Yellen and ECB’s President’s Draghi speeches, due tomorrow, are the highlights ahead of Thursday’s vote, which is seen as main market driver.

Important levels

GBPUSD is in strong rally for the third consecutive day, with overnight’s gap higher opening, confirming renewed strong bullish sentiment. Fresh bullish extension retraced over 76.4% of 1.4737/1.4010 fall, eyeing strong resistances at 1.4688 (200SMA) and recent peaks at 1.4737/68 that mark upside breakpoint.
Initial support lies at 1.4542, followed by daily cloud top at 1.4478 and session low at 1.4431.
Lower breakpoint lays at 1.4385 (Friday’s high / daily cloud base).

EURUSD approached 1.1400 barrier on strong move higher that came after gap-higher week’s start. Near-term technicals turned bullish, favoring retest of key 1.1416 barrier (upside rejection / daily cloud top / Fibo 61.8), break of which is needed to signal resumption of recovery phase from 1.1096 low.
Initial supports lay at 1.1326/06, followed by downside triggers at 1.1294 and 1.1271.

USDJPY bounced from dangerous zone at 103.50 low of last week, trading within 104.40/80 range in early Monday’s trading. Fresh rally lowered strong downside risk, however, technicals remain negative overall, keeping the downside vulnerable for now.
Break above initial barriers at 104.80/105.00 and 105.30, would signal stronger recovery.
Session low at 104.40 marks good support, ahead of downside pivot at 104.10 (Friday’s low).

GOLD remains below $1300 handle, as last week’s close occurred below it, after posting fresh nearly one-year high at $1315. Overall sentiment remains bullish, supported by positive technicals. Strong supports lay at $1271 and $1257, with break of the latter needed to sideline larger bulls.
At the upside, psychological $1300 marks initial resistance, ahead of $1315, break of which would open $1322 and $1345 in extension., Market Analysis