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USDJPY In Bullish Phase In Short-Term, Medium-Term Remains Neutral In 108-114 Range
USDJPY is still in a bullish phase in the short term after rebounding off the key 108-area which was the bottom of the medium-term range in which the pair has been trading in since April. Prices are now approaching the top of the range at 114.
The short-term bias remains bullish. The rising momentum oscillators (RSI and MACD) give room for more upside. Meanwhile, USDJPY broke above the 200-day moving average, giving a bullish signal.
Resistance is likely to be strong at 114. A push above the July 11 high of 114.49 is needed to see increased momentum to the upside to target the next peak at 115.50 from March 10. From here, the next peak at 118.66 comes into view, the highest since January 16.
Should USDJPY fail to break resistance at 114 and turn back down, then support is expected to be provided by the 200-day moving average and by the top of the cloud (currently at 112 and 111.50 respectively) before targeting major support at 108. A break below this level would push the price out of the range and would shift the medium-term bias from neutral to bearish.
The Ichimoku cloud has been moving sideways since February, highlighting the neutral medium-term picture. In the short term, a bullish signal was given when the market rose above the cloud. The Tenkan-sen is above the Kijun-sen line, which is also a bullish signal.
Trade Idea : GBP/USD – Sell at 1.3500
GBP/USD - 1.3394
Most recent candlesticks pattern : N/A
Trend : Up
Tenkan-Sen level : 1.3379
Kijun-Sen level : 1.3390
Ichimoku cloud top : 1.3490
Ichimoku cloud bottom : 1.3450
Original strategy :
Sell at 1.3500, Target: 1.3380, Stop: 1.3535
Position : -
Target : -
Stop : -
New strategy :
Sell at 1.3500, Target: 1.3380, Stop: 1.3535
Position : -
Target : -
Stop : -
As cable has recovered after intra-day brief fall to 1.3349 in London morning, suggesting consolidation above this level would be seen and recovery to 1.3435-40 is likely, however, reckon upside would be limited to 1.3470 and renewed selling interest should emerge around 1.3500-10, bring another decline later. A break of said support at 1.3349 would signal recent decline is still in progress and may extend weakness to previous resistance at 1.3329, then towards 1.3300.
In view of this, would not chase this fall here and would be prudent to sell cable on further subsequent recovery as 1.3500 should hold. Above resistance at 1.3514 would defer and risk a stronger rebound to 1.3535-40 but resistance at 1.3571 should remain intact.
XAUUSD Intraday Analysis
XAUUSD (1283.36): Gold prices broke down below the support zone at 1290 and the current declines could see price testing the next main support that is at 1275 - 1273. The falling trend also shows the possible upside bias that could shift in the event of a breakout above 1290 and the falling trend line. Gold prices are likely to remain subdued in the near term with the resistance level at 1290 and the support level at 1275 likely to be the short term range in prices. A breakout off these levels will only then suggest a further continuation to the momentum.
GBPUSD Intraday Analysis
GBPUSD (1.3383): The British pound close at an eight day low yesterday with the bearish close suggesting further decline in prices. The bullish flag pattern remains invalidated with price action closing below the support at 1.1348 - 1.1344. A modest rebound could be expected with the breached support level likely to turn to resistance. This puts further downside pressure in GBPUSD with the next main support at 1.3236 likely to be tested. The decline to this support level will mark a correction in the GBPUSD rally but could also mean that a new bullish leg could be forming at this support.
EURUSD Intraday Analysis
EURUSD (1.1735): The EURUSD broke past the 1.1822 support level and continued to decline lower, extending the losses. The next support level at 1.1672 is now under focus as price could be seen testing this support level. On the 4-hour chart, the downside price action in EURUSD confirms the descending triangle pattern which puts the lower target towards 1.1688 - 1.1672 level of support. The completion of the descending triangle pattern will potentially see price action likely to post a rebound off this lower support. The new range that could be established will be at 1.1840 - 1.1822 level of resistance and the new support level. Further declines in the common currency could push EURUSD lower towards 1.1440 support.
Sentiment In The US Dollar Improves. US Final GDP Awaited
The greenback managed to post some gains on the back of a better than expected durable goods orders report. Data showed that headline durable goods orders rose 1.7% on a month over month basis in August, beating expectations of a 0.9% increase. Investors were also positive on the U.S. dollar on the proposed tax overhaul which is expected to offer lower tax on corporate businesses and tax cuts on small businesses.
The RBNZ's meeting held yesterday saw the OCR being unchanged at 1.75% as widely expected. The RBNZ was seen lowering its GDP forecasts for the year ahead with the central bank likely preparing for a dovish forward guidance.
Looking ahead, the economic calendar today will focus on the final GDP revisions for the second quarter. According to the median estimates, the U.S. final GDP is expected to remain steady at 3.0%. The BoE Governor Carney is also expected to speak later today.
Trade Idea : EUR/USD – Sell at 1.1810
EUR/USD - 1.1756
Most recent candlesticks pattern : N/A
Trend : Down
Tenkan-Sen level : 1.1739
Kijun-Sen level : 1.1749
Ichimoku cloud top : 1.1847
Ichimoku cloud bottom : 1.1796
Original strategy :
Sell at 1.1830, Target: 1.1720, Stop: 1.1865
Position : -
Target : -
Stop : -
New strategy :
Sell at 1.1810, Target: 1.1710, Stop: 1.1845
Position : -
Target : -
Stop : -
As the single currency has remained under pressure after recent selloff, adding credence to our bearish view that the decline from 1.2093 top is still in progress and downside bias remains for further weakness to 1.1700, however, loss of downward momentum should prevent sharp fall below previous support at 1.1662 and reckon 1.1625-30 would hold, bring rebound later.
In view of this, we are looking to sell euro on recovery as resistance at 1.1811 should limit upside and bring another decline. Above previous support at 1.1832-38 (now resistance) should hold and bring another decline later. Above resistance at 1.1862 would abort and signal low is formed instead, bring a stronger rebound to 1.1896 (another previous support).
USDJPY Holding Onto Gains
The USDJPY pair continues to trade at an 11-week high around the 113 level, as Japanese politics and a stronger U.S dollar help to lift the pair. Japanese parliament was earlier dissolved in time for a snap election, which is widely speculated to be held on October 22nd.
Given the recent strength in the U.S dollar and the uncertainty surrounding the Japanese election, the expectation is for the USDJPY pair to remain bullish in intraday trading.
From a technical perspective, the USDJPY pair will remain strongly bullish, while trading above the former weekly price high, at 112.71.
A clear break above the current monthly high, at 113.25 should encourage USDJPY buying interest towards the July 14th swing high, at 113.57.
Key USDJPY technical support is currently located at 112.89 and the 112.71. Below 112.71 the pair risks further intraday losses towards 112.57 and 112.23.
To the upside, key intraday resistance above the current monthly price-high is found at 113.57 and 113.80. Above 113.80, price further resistance is found at 114.10 and 114.49.
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GBPUSD Pair Remains Weak
The GBPUSD trades under the 1.3400 level, as Brexit negotiations with the EU remain deadlocked and the U.S dollar index continues to strengthen, after President Donald Trump proposed the biggest U.S. tax overhaul in three decades.
Sterling is expected to remain under further selling pressure while U.S fundamentals outweigh the United Kingdom's, while trading sentiment surrounding the greenback support further U.S dollar gains.
The GBPUSD pair has struggled to advance past the 1.3400 technical level during the Asian session, with price-action slipping further towards the currently weekly price-low.
Going forward, the GBPUSD pairs key 200-week moving average remains key, a move below the 200-week MA would signal further bearish losses for sterling
Key intraday support for the GBPUSD pair is found at 1.3360, 1.3340 and the key 1.3300 level. Below the 1.3300 level, the former yearly price high at 1.3268 acts as the foremost support.
To the upside, key GBPUSD technical resistance is found at the pairs daily pivot point, at 1.3400 and the 50-hour moving average at 1.3430. Above 1.3430, buying interest should accelerate towards 1.3444 and 1.3461.
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Data-Dependent Traders Will Have Plenty To Talk About On Thursday
A deluge of economic data will make the rounds on Thursday, giving investors the latest insight into the Eurozone and US economies.
Market participants will be up bright and early for the release of the German consumer confidence survey, courtesy of GfK. The 06:00 GMT release is expected to show a slight increase in the confidence level of German consumers.
The European Commission's statistical agency will release a spate of sentiment indicators at 09:00 GMT, including services sentiment, consumer confidence, economic sentiment, business climate and industrial confidence. The September data sets are expected to confirm steady progress in the 19-member euro area.
Three hours later, Germany will release preliminary CPI data for the month of September. The consumer price index is forecast to rise 1.8% in the 12 months through September, unchanged from August.
Shifting gears to North America, the Labor Department kicks off Thursday trading with a weekly report on jobless claims. At the same time, the Department of Commerce will issue reports on the goods trade balance and second quarter GDP. The third and final estimate of gross domestic product is expected to show 3% annual growth between April and June, unchanged from the previous estimate.
Investors will also be busy keeping track of central bank speeches on Thursday. A pair of European Central Bank (ECB) policymakers are scheduled to speak, followed by Federal Reserve Governors Esther George and Stanley Fischer.
Fed officials are becoming increasingly hawkish on the prospect of a December interest rate increase. The hawkish posture has driven sharp gains in the US dollar, which once again proves the bizarre concept of “buying and rumour and selling the fact.” Between mid-2014 and January 2017, the US dollar index posted monstrous gains on the mere expectation that rates might rise one day. Now that rates have been hiked four times, it's no longer seen as a big deal.
EUR/USD
The euro got whacked again on Wednesday, falling to its lowest level in over a month. The EUR/USD exchange rate is trading around 1.1740, Prices are now eyeing the August low of 1.1661. Losing this level could prove catastrophic for the euro's bullish run.
GBP/USD
The British pound suffered another setback Wednesday, with prices falling below 1.34 US. Cable is currently in a four-day slump even as markets continue to price in a 2017 rate hike by the Bank of England. The GBP/USD faces immediate support at 1.3364. On the upside, immediate resistance is likely found at 1.3490.
USD/CAD
A dovish Stephen Poloz on Wednesday triggered another slide in the Canadian dollar, with the USD/CAD climbing to one-month highs. The pair has gained another 0.1% on Thursday and is up a whopping 400 pips since 8 September. The next major resistance is 1.2464, which is the 50-day moving average.
