Daily Report: Yen Edges Lower on BoJ Speculations but Traders Remain Cautious
Action Insight | Written by ActionForex.com | Jan 17 07 08:11 GMT |
Forex Daily Technical Report Yen Edges Lower on BoJ Speculations but Traders Remain Cautious
Yen weakens to a new 13 months low against dollar today as Kyodo news agency reported that BoJ will be on hold against this week. But the fall is, so far, mild as traders remains cautious ahead of the announcement tomorrow. Technically speaking, the current rise in USD/JPY towards 121.38 resistance (05 high) is looking out of steam and one should start pay attention to reversal signal as USD/JPY approaches this resistance. On the other hand, dollar continues to consolidate against European majors ahead of today’s PPI inflation report, TICS capital flow and industrial production.
Headline PPI growth in US is expected to slow to 0.5% in Dec, from 2.0% with core PPI slowed to 0.1%, from 1.3%. TICS net capital flow is expected to retreat from 82.3B to 77.5B in Nov. Meanwhile, industrial production is expected to slow from 0.2% to 0.1% with Capacity Utilization staying at 81.8%. UK employment data will be featured in European. Dec claimant count is expected to drop 3.0k while unemployment rate is expected to stay at 5.5%.
Released overnight from New Zealand, Q4 CPI came in below expectation by dropping 0.2% qoq, slowing the yoy increase to 2.6% and is the first time in 17 months that the pace of inflation lies within RBNZ’s target range of 1% to 3%. Such inflation picture has reduced the likelihood of a rate hike next week. NZD tumbles on this news. EUR/USD
Daily Pivots: (S1) 1.2888; (P) 1.2938; (R1) 1.2969; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
EUR/USD’s recovery from 1.2867 was limited at 1.2988, slightly below 4 hours 55 EM. Subsequent fall has pushed EUR/USD below 1.2922 minor support, suggesting that the recovery is over. Intraday bias is shifted back to the downside for a test of 1.2867 low. Break will indicate fall from 1.3296 has resumed for next downside target of 1.2760 support.
On the upside, above 1.2988 again will indicate the recovery from 1.2867 is still in progress. But still, we’d expect upside to be limited by 1.3052 cluster resistance (38.2% retracement of 1.3364 to 1.2867 at 1.3057) and bring decline resumption.
In the bigger picture, with a break of 1.2922 cluster support (50% retracement of 1.2483 to 1.3362 at 1.2923), and bearish divergence condition in weekly MACD, a medium term top could be already in place a 1.3364. Sustained break of 1.2760 will have 161.8% projection of 1.3364 to 1.3051 from 1.3296 at 1.2790 and possibly medium term rising channel line (now at 1.2710) taken out. This 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 this cluster support will confirm this case and have medium term outlook turned bearish.
On the upside, a break of 1.3052 cluster resistance will indicate the fall from 1.3364 has possibly completed after drawing support from resistance line (1.2978 to 1.2937, now at 1.2859). Focus is turned back to 1.3296 resistance but a break of 1.3364 is needed to indicate rise from 1.2483 has resumed. Otherwise, medium term outlook is, at best, neutral.
GBP/USD
Daily Pivots: (S1) 1.9567; (P) 1.9636; (R1) 1.9682; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
Cable’s rally from 1.9261 was limited at 1.9706 so far. Subsequent retreat has dragged 4 hours MACD below signal line with RSI pulled back from overbought region. Touching of 1.9588 suggest that an intraday top is formed and further consolidation is in favor with risk of further pull back towards 4 hours 55 EMA (now at 1.9527). However, we’d expected downside to be contained above 1.9452 resistance turned support and bring rally resumption. On the upside, above 1.9760 will indicate rise from 1.9261 has resumed for 1.9750 resistance.
In the bigger picture, break of 1.9564 cluster resistance (61.8% retracement of 1.9750 to 1.9261 at 1.9563) suggest correction from 1.9846 has completed after three waves down to 1.9261. Break of 1.9750 will encourage further rise towards 1.9846 high and then next upside target of 138.2% projection of 1.8090 to 1.9142 from 1.8517 at 1.9917.
On the downside, it will take a break below 1.9452 support will argue that the whole rise from 1.9261 has completed but a break below 1.9315 is needed to confirm. Below 1.9315 support will bring a retest of 1.9261 low and then 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). We’ll still hold on to the preferred case that price actions from 1.9846 is merely correction to rise from 1.8834 only as long as 1.9177 remains intact. But 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.
USD/CHF
Daily Pivots: (S1) 1.2430; (P) 1.2463; (R1) 1.2511; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.
USD/CHF’s consolidation from 1.2528 continues today but still, downside is contained above 1.2408 support and 4 hours 55 EMA (now at 1.2411). At this point, further consolidation is still in favor as long as USD/CHF stays below 1.2497 minor resistance but consolidation should still be brief and further rally is still in favor as long as downside is contained by 1.2408 support.
On the downside, with 4 hours MACD’s staying below signal line break of 1.2408 will indicate a short term top is formed and encourage further pull back to 38.2% retracement of 1.2111 to 1.2528 at 1.2369). But downside should be contained by 1.2270 cluster support (38.2% retracement of 1.1878 to 1.2528 at 1.2280, 61.8% retracement of 1.2111 to 1.2528 at 1.2270) and bring further rally.
In the bigger picture, previous break of 1.2343 resistance has opened up a few possibilities. Decisive break of 1.2501 projection level will start to argue the rise from 1.1878 is of impulsive nature. In other words, the whole down trend from 1.3283 could have completed and the current rise from 1.1878 could be a resumption of the medium term rebound from 1.1288 to 1.3283. Further rally should be seen to 1.2768 resistance first. But still, a strong break of 1.2768 cluster resistance is needed to confirm such case. Otherwise, USD/CHF will just be bounded in choppy range trading between 1.1878 and 1.2768.
Meanwhile, on the downside, a sustained break of 1.2270 cluster support will suggest that the whole rebound from 1.1878 has possibly completed and put focus back to 1.2110 support. Break will shift focus back to the downside for 1.1878 low.
USD/JPY
Daily Pivots: (S1) 120.32; (P) 120.54; (R1) 120.86; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/
USD/JPY edges further higher to 120.85 but upside momentum is unconvincing with 4 hours MACD staying below signal line and bearish divergence condition in 4 hours RSI. Nevertheless, intraday bias will still be on the upside as long as USD/JPY stays above 120.20 minor support and further rise should be seen towards next upside target of 121.38 resistance (05 high).
However, below 120.20 will starts to argue that USD/JPY’s rally from 117.96 has completed and risk further pull back to 4 hours 55 EMA (now at 119.85) or lower. But downside should be contained above 119.02 cluster support (61.8% retracement of 117.96 to 120.71 at 119.01) and bring another rally. On the downside, break of 119.02 cluster support will indicate the rise from 114.41 has possibly completed. Focus will then be on 117.96 support and break will encourage deeper correction.
In the bigger picture, sustained break of 119.86 resistance confirmed that whole rally from 108.99 has resumed for 121.38 resistance As discussed before, fall from 121.38 to 108.99, with its three wave nature, should either represent the correction to whole year long up trend from 101.65 to 121.38, or part of such correction. That is, the medium term rally from 108.99 is either resumption of the whole up trend from 101.65 or a rising leg of consolidation pattern that started at 121.38. Favor is still in the former case as long as USD/JPY stays above 114.41 support or before sign of reversal.
Also, note that the current rally has pushed USD/JPY above multi-year falling trend line (147.68 to 135.20, now at 117.65) again. Sustained break of 121.38 resistance will confirm that whole up trend from 101.65 has resumed.
Forex News Digest
http://c.moreover.com/click/here.pl?r771843266
Wed, 17 Jan 2007 04:08:00 GMT from Yahoo! Singapore
http://c.moreover.com/click/here.pl?r771827218
Wed, 17 Jan 2007 03:51:00 GMT from ABC Money
http://c.moreover.com/click/here.pl?r771824444
Wed, 17 Jan 2007 03:47:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r771806263
Wed, 17 Jan 2007 03:30:00 GMT from The Mercury
http://c.moreover.com/click/here.pl?r771798371
Wed, 17 Jan 2007 03:23:00 GMT from Bloomberg
http://c.moreover.com/click/here.pl?r771767957
Wed, 17 Jan 2007 02:48:00 GMT from Reuters
http://c.moreover.com/click/here.pl?r771743335
Wed, 17 Jan 2007 02:23:00 GMT from Yahoo! Singapore
http://c.moreover.com/click/here.pl?r771741301
Wed, 17 Jan 2007 02:21:00 GMT from Yahoo! Singapore
http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:30 AUD Australia Westpac leading index Nov 0.50% N/A 0.50%
23:30 JPY Japan Trade balance (jpy) Nov 1032B 1000 B 756 B
23:30 JPY Japan Current account Nov 1756B 1939 B 1514 B
05:00 JPY Japan Consumer confidence Dec 46.3 47.6 48.9
06:00 JPY Japan Machine tool orders Dec -1.90% N/A -2.40%
07:00 EUR Germany CPI final M/M Dec 0.80% 0.80% -0.10%
07:00 EUR Germany HICP final M/M Dec 0.90% 1.00% -0.10%
09:30 GBP U.K. Claimant count Dec -3.0 K -5.7 K
09:30 GBP U.K. ILO unemployment rate 3M Nov 5.50% 5.50%
10:00 EUR Eurozone Trade balance (euro) Nov 2.0 B 1.7 B
10:00 EUR Eurozone CPI final M/M Dec 0.40% 0.00%
13:30 USD U.S. PPI M/M Dec 0.50% 2.00%
13:30 USD U.S. PPI - X M/M Dec 0.10% 1.30%
14:00 USD U.S. Foreign treasury buy Nov N/A 26.3
14:00 USD U.S. Net capital flow Nov 77.5 B 82.3
14:15 USD U.S. Capacity utilisation Dec 81.80% 81.80%
14:15 USD U.S. Industrial prod’n M/M Dec 0.10% 0.20%
http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/