Daily Forex Report: BoJ Cuts 20bps, Has Euro Topped?
By ActionForex
The forex markets are rather steady today so far as little response is paid to BoJ’s rate cut. the Bank of Japan cut the overnight lending rate from 0.3% to 0.1% on 7-1 vote and announced plan to buy corporate debts to help corporate raise funds during deepening recession. Tado Noda was the sole member to dissent. Basic loan rate was also lowered by 20bps to 0.3% by unanimous vote. Yen remains mixed after the decision. Note that firstly, more upside cannot be ruled out in EUR/JPY and CHF/JPY as supported by the theme of intervention. Secondly, USD/JPY’s recovery is not convincing yet as the downtrend is still intact. Thirdly, GBP/JPY, AUD/JPY and CAD/JPY are staying in range despite all the volatility elsewhere. There is not broad based direction in the Japanese currency for the moment. Read the rest of this entry »
GBP/JPY Mid-Day Outlook
Daily Pivots: (S1) 137.32; (P) 138.20; (R1) 139.59
GBP/JPY’s recovery from 133.09 was limited below 140.71 resistance and weakens again today. 4 hours MACD’s cross below signal line indicates that an intraday top is formed and dampens the immediate bullish case. Intraday outlook is turned neutral for the moment. On the upside, above 140.71 will indicate that rise from 133.09 has resumed. Also this will affirm the case that a short term bottom is in place at 133.09 and bring rally towards 148.57 resistance next. Break there will confirm this case. On the downside, though, below 133.09 will indicate recent down trend is still in progress for key long term support at 129.32 before completion. Read the rest of this entry »
Daily Pivots: (S1) 95.19; (P) 96.17; (R1) 96.68
USD/JPY’s break of the intraday trend line support with 4 hours MACD dragged down signal line argues that fall from 100.54 might be resuming. Intraday bias is now mildly on the downside and near term focus is turned to 94.47 minor support. Break will confirm this scenario and bring deeper fall to retest 90.92 low first. On the other hand, above 97.13 minor resistance will revive the case that rebound from 90.92 is still in progress for 100.54 or above before completion.
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USD/JPY spiraled lower to 93.55 last week but downside momentum was rather unconvincing. So far, the structure of the fall from 100.54 to 93.55 is still looking corrective, arguing that rebound from 90.92 is not over. Anyway, with 4 hours MACD crossed above signal line, initial outlook is neutral this week. Break of 98.18 will favor the case that rise 90.92 is still in progress and another rally could be seen to 100.54 or above before completion. On the downside, though, below 93.55 will indicate that fall from 100.54 is still in progress and will continue to target 90.92 low. Read the rest of this entry »
Daily Pivots: (S1) 95.19; (P) 96.17; (R1) 96.68
USD/JPY’s break of the intraday trend line support with 4 hours MACD dragged down signal line argues that fall from 100.54 might be resuming. Intraday bias is now mildly on the downside and near term focus is turned to 94.47 minor support. Break will confirm this scenario and bring deeper fall to retest 90.92 low first. On the other hand, above 97.13 minor resistance will revive the case that rebound from 90.92 is still in progress for 100.54 or above before completion.
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Daily Pivots: (S1) 1.4609; (P) 1.4781; (R1) 1.4907
GBP/USD’s recovery from 1.4557 extends further today and with 4 hours MACD staying well above signal line, an intraday low should be in place. Some more consolidation is in favor. Above 1.4557 will encourage stronger recovery towards 4 hours 55 EMA (now at 1.5327). But upside should be limited below 1.5600 support turned resistance and bring fall resumption. On the downside, below 1.4557 will target mentioned 100% projection of 1.7630 to 1.5269 from 1.6671 at 1.4310.
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EUR/USD Weekly Outlook
EUR/USD’s down trend resumed last week and fell sharply to as low as 1.2496. Friday’s recovery after drawing support from the short term fall channel, with 4 hours MACD crossed above signal line, argues that a short term bottom might be in place. Though, break of 1.2754 minor resistance is needed to confirm. Otherwise, intraday bias remains on the downside and further fall should be seen to 100% projection of 1.4867 to 1.3258 from 1.3768 at 1.2159 next. Break of 1.2754 will bring stronger recovery to 1.3004 resistance or above. But upside should be limited by 1.3258 resistance and bring down trend resumption.
In the bigger picture, some key important long term support levels were taken out last week without much hesitation. The strength of the fall as well as the breaking of 100% projection of 1.6038 to 1.3381 from 1.4867 at 1.2710 reinforces that case that whole decline from 1.6038 is developing into a five wave impulsive fall. As mentioned before, if this is true, EUR/USD is probably still in the middle of it and should eventually extend to below 1.1639 key long term support before making a medium term bottom. Break of 1.3768 resistance is needed to invalidate this view and indicates that a medium term bottom is formed earlier than we thought. Otherwise, medium term outlook will remain bearish even in case of strong rebound. Read the rest of this entry »
Daily Pivots: (S1) 101.34; (P) 102.20; (R1) 102.91
USD/JPY’s fall from 103.06 continues today and touching of 100.93 minor support, with 4 hours MACD dragged below signal line argues that rebound from 97.91 might have completed. Intraday bias is flipped back to the down side for a retest of 97.91 low. Break will confirm recent decline has resumed for retesting 95.77 low. On the upside, focus remains on 103.49/54 resistance. As long as this resistance zone holds, the fall from 110.66 should still be in progress. However, sustained break of 103.54 will argue that fall from 110.66 has completed and focus will turn to 106.14 resistance for confirmation.
In the bigger picture, medium term rise from 95.77 has completed at 110.66 with bearish divergence condition in daily MACD. Also, the three wave structure of such rise argues that it’s just correction, or part of the consolidation to the down trend from 124.13. Hence, deeper fall is now expected to retest 95.77 low. Break will confirm that whole down trend from 124.13 has resumed and should target 61.8% projection of 124.13 to 95.77 from 110.66 at 93.13 first. On the upside, above 106.14 resistance will indicate that fall from 110.66 has completed. This will suggest that medium term consolidation from 95.77 is still in progress. In such case, another test of 110.66 could be seen before resuming the down trend from 124.13.
Daily Pivots: (S1) 132.69; (P) 134.52; (R1) 136.82
EUR/JPY’s recovery from 132.19 extends further to as high as 137.65 today but after all it’s still limited below 139.72 key near term resistance. With 4 hours MACD staying above signal line, intraday outlook is neutral for the moment and some more recovery could still be seen. However, there is no confirmation of a short term bottom yet and another fall is still in favor as long as 139.72 resistance holds. Sustained trading below 132.19 low will pave the way to next target of 50% retracement of 88.97 to 169.96 at 129.47. On the upside, though, above 139.72 will indicate that a short term bottom is in place and bring lengthier consolidation. Nevertheless, rebound should be limited below 147.03 resistance and bring down trend resumption. Read the rest of this entry »
Daily Pivots: (S1) 0.6341; (P) 0.6749; (R1) 0.7048
AUD/USD rebound strongly after diving to as low as 0.6445, just hitting mentioned target of 100% projection of 0.9849 to 0.7802 from 0.8519 at 0.6472. With 4 hours MACD crossed above signal line, an intraday low is in place. Outlook is turned neutral for the moment, with bias mildly on the upside for further consolidation/correction. However, upside is expected to be limited by 0.7361 resistance and bring fall resumption. On the downside, below 0.6655 minor support will flip intraday bias back to the downside for retesting 0.6445 low.
In the bigger picture, a long term top is in place at 0.9849 with bearish divergence condition in monthly MACD and RSI. Considering the corrective three wave structure of the multi year up trend from 0.4773 to 0.9849, it could represents a correction to multi decade down trend or part of consolidation. 61.8% retracement of 0.4773 to 0.9849 at 0.6712 is already taken out. Next medium term target is 76.4% retracement level at 0.5971. On the upside, medium term outlook will remain bearish as long as 0.7802 support turned resistance holds even in case of stronger than expected rebound.
