USD/JPY Does Offer A Compelling Long — Here’s Why
The statement from the G7 appears to leave more
questions than answers. The overall format of the statement barely
differed from previous communiqué’s in Dubai and Boca Raton. The effect has
been somewhat muted in FX, although the EUR and JPY all weakened a fair amount.
The Yen
weakness appears to be attributed to the nagging rise in oil prices as well as
continued data pointing to a slow-down domestically and internationally.Â
Meanwhile continued hawkish comments from the ECB have done little to take
pressure off the EUR/USD overnight. This is consistent with my view that dollar
based pairs continue to be erratic and lacking any trend persistency.
Technical
Notes:
EUR/USD:Â
daily and weekly momentum now clearly weaker. Trend lines on daily and weekly
have given way after last weeks solid technical performance. For now, the
sidelines offer the best view.
USD/JPY:Â
while I am keen on avoiding dollar-based pairs at present; the USD/JPY does
offer a compelling long. Daily bear-trend line has been breached and weekly
bear trend-line is on the verge of falling too.
GBP/USD:Â
a re-test of range lows appears in order here. Daily and weekly momentum
clearly negative at present, 1.7695 the next logical area for support.
USD/CHF:Â
this pair is clear evidence of why dollar based pairs remain treacherous at
present. Thursday’s solid break of key support has been retraced entirely and
then some. Weekly chart shows possible upside move now if key resistance can be
breached at 1.2750.
EUR/GBP:Â
we have cut half of our long in this pair after favorable results but some early
signs of technical deterioration. Stop losses have been tightened to
break-even.
EUR/JPY:Â
a pair to keep an eye on. Given that this is a non-dollar pair and the
technicals are setting up for a good long, keep an eye on 136.40 as support and
137.85 for a breakout level.
As always, feel free to send me your comments and questions.