Daily Report: Yen Edges Higher as G7 Theme Continues
Action Insight | Written by ActionForex.com | Feb 06 07 07:51 GMT |
Forex Daily Technical Report Yen Edges Higher as G7 Theme Continues
The Japanese edges higher across the board today as the G7 theme continues to dominate. USD/JPY, EUR/JPY and GBP/JPY all extended further weakness to 120.00, 155.24 and 235.35 respectively. Eurogroup Chairman Jean-Claude Juncker’s comment that Yen will certainly be discussed has weighed down the EUR/JPY cross. Though, Juncker said that it’s too early to say whether the yen will be singled out in the G7 communique. Japanese Finance Minister Koji Omi said today that he didn’t know what would be discussed at the G7 but would tell the meeting that Japan’s economy is recovering amid stable prices.
Economic calendar is light today with Eurozone retail sales and Germany factory orders to feature. Retail sales report from Eurozone is expected to report stronger holiday spirit in Dec by rising 1.1% mom, 2.3% yoy comparing to prior 0.5% mom, 1.3% yoy growth. Meanwhile, Germany factory orders is expected to show 0.6% mom, 7.4% yoy growth in Dec. There will be no important economic data to be released from the US today. Focus will be on Treasury Paulson’ s testimony on 2008 Budget at Senate Finance Committee. Bernanke, Moskow and Yellen are also scheduled to speak today on various events. EUR/USD
Daily Pivots: (S1) 1.2904; (P) 1.2935; (R1) 1.2957; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD edges lower to 1.2911 but lacks decisive momentum to go further yet. Nevertheless, further decline is still expected to be seen towards 1.2865 low as long as EUR/USD stays below 1.2964 resistance. Break of 1.2865 will confirm recent decline from 1.3364 has resumed for downside target of 1.2760 support.
On the upside, above 1.2964 will turn intraday outlook consolidative and risk further rebound. But still, as discussed before, as long as 1.3052/57 cluster resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057) holds, price actions from 1.2865 will be treated as consolidation to decline from 1.3364 only. Hence, further fall is still in favor.
In the bigger picture, an important medium term top could be in place at 1.3364 already, with bearish divergence condition in weekly MACD and RSI. Sustained break of 1.2760 support, which will also have medium term rising channel line (1.1639, 1.2483, 1.2978, now at 1.2761) taken out too, will add much weight to the case that whole medium term up trend from 1.1639 has completed. Focus will then be on 1.2483 cluster support (50% retracement of 1.1639 to 1.3364 at 1.2502). Decisive break of 1.2483 cluster support will confirm this case and have medium term outlook turned bearish.
However, sustained break of 1.3052/57 cluster resistance will indicate the fall from 1.3364 has already completed at 1.2865, after drawing support from resistance line (1.2978 to 1.2937). Further rally should then be seen towards next resistance zone of 61.8% retracement of 1.3364 to 1.2865 at 1.3173 and falling trend line resistance (1.3364 to 1.3296, now at 1.3186.) first. Also, it will save the case that medium term up trend from 1.1639 is still in progress with EUR/USD kept inside the rising channel. Break of 1.3296 resistance will suggest the rise from 1.2483 has possibly resumed and EUR/USD could make a new high above 1.3364 before finally making a top on above mentioned bearish divergence condition in weekly chart.
GBP/USD
Daily Pivots: (S1) 1.9535; (P) 1.9601; (R1) 1.9667; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable’s fall from 1.9745 was contained at 1.9533 and recovers mildly since then. But still, since the rebound from 1.9480 has likely completed after being limited by 61.8% projection of 1.9913 to 1.9480 at 1.9748, further weakness is expected to follow to retest trend line support (now at 1.9522) as long as 1.9625 support turned resistance holds. Above 1.9625 will turn intraday outlook consolidative first.
In the bigger picture, with mentioned trend line support remains intact, the rise from 1.8517 is still in progress and further rally could still be seen that brings cable above 1.9913 high. However, close attention will be paid to sign of loss of upside momentum and reversal pattern formation as cable approaches key 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067) as the whole medium term up trend from 1.7047 could complete at or below this level.
Meanwhile, we already have bearish divergence conditions in weekly RSI, daily MACD and RSI. Sustained break of the trend line support will confirm that whole rise from 1.8517 has completed and bring decline towards 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237). Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed earlier than we thought and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818) first.
USD/CHF
Daily Pivots: (S1) 1.2462; (P) 1.2489; (R1) 1.2511; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF’s recovery from 1.2382 was limited at 1.2517 and turns sideway since then. At this point, further recovery cannot be ruled out as long as USD/CHF stays above 1.2453 minor support. However, a short term top should be formed at 1.2571 already, after breaking of the short term rising channel with bearish divergence condition in 4 hours MACD and RSI. Hence, short term outlook remains consolidative as long as USD/CHF stays below 1.2571 high and risk of another fall remains. Below 1.2453 will encourage further correction to 1.2382 support and then 1.2268 support. Meanwhile, a firm break above 1.2571 is needed to confirm recent rally from 1.1878 has resumed.
In the bigger picture, as long as 1.2268 support holds, the current price actions from 1.2571 should merely be a correction to rally from 1.1878 and hence further rise is still in favor. On the upside, decisive break of mentioned medium term trend line resistance (1.3238 to 1.2768, now at 1.2530) will indicate that whole medium term down trend from 1.3283 has already completed at 1.1878. Further rally should be seen towards 1.2768 cluster resistance(61.8% retracement of 1.3283 to 1.1878 at 1.2746) first. Break of 1.2768 cluster resistance will add much weight to the case that whole corrective rise from 1.1288 (04 low) has resumed and further rally should be seen towards 1.3283 (06 high) or above.
However, sustained break of 1.2268 resistance turned support will raise much doubt about this scenario. In particular, weekly MACD will still be kept negative with daily MACD staying below signal line. Deeper decline should be seen towards 1.2211 support and even further to retest 1.1878 low as the medium term down trend from 1.3283 is back in force.
USD/JPY
Daily Pivots: (S1) 119.98; (P) 120.57; (R1) 120.91; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY continues to trade with and undertone and edged lower to 120.00 today. As discussed before, a short term top should be formed at 122.17, after subsequent fall has taken out short term rising channel and with bearish divergence condition remaining in 4 hours MACD and RSI. Hence further correction is still expected to be seen towards 119.21/24 cluster support (38.2% retracement of 114.41 to 122.17 at 119.21 and 100% projection of 122.17 to 120.07 from 121.34 at 119.24).
Also, since the current price actions from 122.17 is treated as correction to rally from 114.41 only, we’d expect downside to be contained by 119.21/24 support and bring further rally. Above 121.34 will suggest that corrective fall from 122.17 has completed and should bring retest of this high. But still, break of 122.17 is needed to indicate rise from 114.41 has resumed.
In the bigger picture, with medium term up trend from 108.99 remains in force, favor is still on the case that rise from 108.99 represents resumption of long term up trend from 101.66. The preferred interpretation of the rise from 108.99 is that the first move has completed at 117.87. Subsequent price actions to 113.95, 119.86 and 114.41 is treated as interim consolidation that’s skewed upward by the rise to 119.86. Rise from 114.41 is treated as resumption of the whole up trend. With this interpretation, next upside target will be 100% projection of 108.99 to 117.87 from 114.41 at 123.29.
However, decisive break of 117.96 support will rise some doubt about this interpretation In such case, a deeper decline should follow to retest medium term rising channel (now at 115.68) first. A break of this channel will swing favors back to the case that another medium term decline should be seen towards 108.99 low before completing the whole long term consolidation that started at 121.38.
Forex News Digest
http://c.moreover.com/click/here.pl?r797101390
Tue, 6 Feb 2007 03:23:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r797095099
Tue, 6 Feb 2007 03:15:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r797094026
Tue, 6 Feb 2007 03:14:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r797087211
Tue, 6 Feb 2007 03:04:00 GMT from The Australian
http://c.moreover.com/click/here.pl?r797085265
Tue, 6 Feb 2007 03:01:00 GMT from The Nation - Thailand
http://c.moreover.com/click/here.pl?r797067708
Tue, 6 Feb 2007 02:38:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r797046933
Tue, 6 Feb 2007 02:16:00 GMT from Bloomberg
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
05:00 JPY Japan Leading indicator Dec 25 25 18.2
10:00 EUR Eurozone Retail sales M/M Dec 1.10% 0.50%
10:00 EUR Eurozone Retail sales Y/Y Dec 2.30% 1.30%
11:00 EUR Germany Factory orders M/M Dec 0.50% 1.50%
11:00 EUR Germany Factory orders Y/Y Dec 7.40% 6.10%
13:30 CAD Canada Building permits M/M Dec -2.50% 3.00%
15:00 USD Paulson’s testimony
18:30 USD Bernanke’s speech
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/