Daily Report: EUR/JPY Rally Continues on Expectation of Widening Rate Gap
Action Insight | Written by ActionForex.com | Dec 20 06 08:11 GMT |
Forex Daily Technical Report EUR/JPY Rally Continues on Expectation of Widening Rate Gap
EUR/JPY continues to score another record high above 156 level today. Expectation of widening rate gap is still weighing on the Japanese yen, in particular after yesterday’s dovish comments from BoJ Governor Fukui as well as strong Germany Ifo index. Yen’s weakness in crosses will likely continue and in addition, provide support to Euro against dollar.
UK MPC minutes for this month’s meeting will be the main feature today. The decision for keeping rates unchanged at 5.0% is expected to be done by a 9-0 vote. While focus will be on BoE’s view on the balance of risk and inflation, one must note that the discussions recorded in the minutes were carried out before last week’s strong inflation and retail sales data. EUR/USD
Daily Pivots: (S1) 1.3114; (P) 1.3164; (R1) 1.3246; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD’s rally from 1.3051 continues to as high as 1.3244 so far. At this point, intraday bias remains on the upside as long as EUR/USD stays above 1.3186 minor support. Further rise is expected to follow towards 1.3291 resistance and then retest 1.3364 high. Below 1.3186 will turn intraday outlook consolidative first.
As discussed before, prices action from 1.3362 is treated as correction to rally from 1.2760. Such correction should have completed at 1.3051, after meeting 1.3056/61 target (100% projection of 1.3364 to 1.3129 from 1.3291 at 1.3056, 50% retracement of 1.2760 to 1.3362 at 1.3061). Subsequent rebound from there could represent resumption of the whole rise form 1.2483 but a decisive break above 1.3364 resistance is needed to confirm and bring further rise towards next upside target of 1.3668 (04 high). Otherwise consolidation may still continue to extend.
On the downside, below 1.3105 resistance turned support is needed to turn short term bias back to the downside and indicate correction from 1.3362/64 is still in progress. But even in such case, downside is still expected to be contained above 1.2911/38 support (50% retracement of 1.2483 to 1.3362 at 1.2923, 161.8% projection of 1.3364 to 1.3129 from 1.3291 at 1.2911) and bring another rally.
In the long term picture, the medium term rise from 1.1639 could either be resumption of this multi-year up trend or just part of a larger scale consolidation that started at 1.3668. But neither case is confirmed yet. Nevertheless, medium term outlook remains bullish with EUR/USD saying above 1.2760 support. Decisive break of 100% projection of 1.1639 to 1.2978 from 1.2483 at 1.3822 will confirm long term up trend has resumed for 1.4 psychological resistance first. On the downside, break of 1.2760 support will turn medium term outlook neutral and argue that whole medium term rally from 1.1639 has possibly completed. Focus will be shifted by to 1.2483 key support and break will confirm this case and bring much deeper decline.
GBP/USD
Daily Pivots: (S1) 1.9535; (P) 1.9616; (R1) 1.9770; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable’s rise from 1.9433 extends further to as high as 1.9739 so far today, breaking marginally above 1.9727 resistance. At this point, intraday bias remains on the upside as long as cable stays above 1.9677 minor support. Further rise is expected to follow to retest 1.9846 high. Below 1.9677 will turn intraday outlook consolidative first.
As discussed before, price actions from 1.9846 were treated as consolidation to rally from 1.8834 only. Such consolidation should have completed at 1.9433, after being supported by 38.2% retracement of 1.8834 to 1.9846 at 1.9459 again. Rise from there could represent resumption of whole rally from 1.8517. But decisive break of 1.9846 is needed to confirm and bring further rise to next upside target of 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9971. Otherwise, consolidation might extend further.
On the downside, below 1.9497 resistance turned support is needed to shift short term bias back to the downside and indicate corrective fall from 1.9846 is still in progress. But even in such case, downside should be contained by 1.9338/44 cluster support (50% retracement of 1.8834 to 1.9846 at 1.9340, 38.2% retracement of 1.8517 to 1.9846 at 1.9338) and bring rally resumption.
In the long term picture, break of 1.9554 high added much credence to the case that this multi-year up trend from 1.3680 has resumed. However, this is not confirmed yet. Nevertheless, medium term outlook remains bullish with cable stays above 1.9177 cluster support (50% retracement of 1.8517 to 1.9846 at 1.9182, 23.6% retracement of 1.7047 to 1.9846 at 1.9185). On the upside, decisive break of 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) will confirm that long term up trend from 1.3680 has resumed. On the downside, sustained break of 1.9177 cluster support will turn medium term outlook neutral and argue that the whole rise from 1.7047 has possibly completed. Focus will be turned to 1.8517 support..
USD/CHF
Daily Pivots: (S1) 1.2095; (P) 1.2162; (R1) 1.2207; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF’s fall from 1.2268 extends further to 1.2117 today is is pressing mentioned 1.2115 cluster support (38.2% retracement of 1.1878 to 1.2268 at 1.2119). At this point, intraday bias remains on the downside as long as USD/CHF stays below 1.2147 minor resistance, further fall is still expected to follow towards 1.2026 cluster support (61.8% retracement of 1.1878 to 1.2268 at 1.2027). Meanwhile, above 1.2147 will turn intraday outlook consolidative first.
The rebound from 1.1878 which is treated as correction to the fall from 1.2768, should have completed at 1.2268 after breaking of the short term rising trend line with 4 hours MACD dragged below signal line. Break of 1.2026 cluster support will confirm such case and bring retest of 1.1878 low.
Following EUR/USD, USD/CHF dipped to as long as 1.2159 today, dragging 4 hours MACD to below signal line. A top should be formed at 1.2268, after failing to stay firm above 1.2207/18 cluster resistance (50% retracement of 1.2536 to 1.1878 at 1.2707, 38.2% retracement of 1.2768 to 1.1878 at 1.2218). But still, sustained trading below 1.1878 is needed to confirm fall from 1.2768 has resumed for 100% projection of 1.3283 to 1.1919 from 1.2768 at 1.1404. Otherwise, consolidation could extend further. On the upside, break of above 1.2229 resistance is needed to turn short term bias back to the upside and indicate rebound from 1.1878 is still in progress.
In the long term picture, the current medium term fall from 1.3283 could either be resumption of multi-year down trend from 1.8305 or part of a large scale consolidation that started from 1.1288. But, neither case is confirmed yet. Nevertheless, medium term outlook remains bearish with USD/CHF staying below 1.2343 cluster resistance (50% retracement of 1.2768 to 1.1878 at 1.2323, 161.8% projection of 1.1878 to 1.2097 from 1.1983 at 1.2337). Sustained trading below 1.1288 support (04 low) will confirm that the long term down trend has resumed. Meanwhile, decisive break of 1.2343 cluster resistance will turn medium term outlook neutral and open up some other possibilities. But in any case, a firm break of 1.2343 resistance will likely bring stronger rebound towards 1.2536 resistance and probably further to retest 1.2768 resistance too.
USD/JPY
Daily Pivots: (S1) 117.84; (P) 118.07; (R1) 118.32; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY continues to trade sideway below 118.31 resistance at this point. Even though a short term top could be formed already with 4 hours MACD dragged below signal line, this is not confirmed yet. Further rise towards 118.58 resistance cannot be ruled out as long as USD/JPY stays above 117.42 support.
On the downside, below 117.42 will bring correction to below 4 hours 55 EMA (now at 117.34) and probably further towards 116.63 support. But downside should be contained above 115.87/90 resistance turned support (61.8% retracement of 114.41 to 118.31 at 115.90) and bring rally resumption.
In the bigger picture, firm break of 117.11 cluster resistance (50% retracement of 119.86 to 114.41 at 117.14) confirmed fall from 119.86 has completed with three waves down to 114.41, contained well above 113.14/39 cluster support (61.8% retracement of 108.99 to 119.86 at 113.14), suggesting that it’s merely a correction to the rally from 108.99. Therefore, favor is shifted to the case that medium term rally from 108.99 is indeed, still in progress. Above 18.58 will encourage a retest of 119.86 high. Break should bring further rally to 121.38 resistance (05 high). On the downside, sustained break below 115.87 cluster support will argue that the fall from 119.86 has resumed for 114.41 low first.
Forex News Digest
http://c.moreover.com/click/here.pl?r742185459
Wed, 20 Dec 2006 04:01:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r742178187
Wed, 20 Dec 2006 03:52:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r742175809
Wed, 20 Dec 2006 03:48:00 GMT from CHINAdaily
http://c.moreover.com/click/here.pl?r742169962
Wed, 20 Dec 2006 03:41:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r742124087
Wed, 20 Dec 2006 02:36:00 GMT from Glasgow Herald
http://c.moreover.com/click/here.pl?r742121438
Wed, 20 Dec 2006 02:32:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r742113778
Wed, 20 Dec 2006 02:23:00 GMT from Kyodo
http://c.moreover.com/click/here.pl?r742111676
Wed, 20 Dec 2006 02:20:00 GMT from Bloomberg
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
21:45 NZD NZ Currnet account Q3 -4.58B -5.10 B -3.08 B
23:30 AUD Australia W’pac leading indicator Oct 0.50% N/A 0.40% 0.50%
08:00 EUR ECB’s Trichet speech
08:15 CHF Swiss PPI M/M Nov 0.00% -0.10%
08:15 CHF Swiss PPI Y/Y Nov 2.80% 2.40%
09:30 GBP MPC Minutes Dec 9 to 0 2 to 7
09:30 GBP U.K. PSNCR M/M Nov 8.70 B -8.42 B
13:30 CAD Canada Wholesale slaes M/M Oct -0.10% -1.60%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/