EURUSD H4 Chart
The EURUSD rose sharply yesterday and stopped just short of 1.2700 with a high price of 1.2675. The pair is now trading at 1.2642. Yesterday's rally of 160 pips, equating to a 1.3% appreciation is the largest one day up move in the pair since March earlier this year. A break above 1.2700 and 1.2725 will open up the potential of a reversal of the recent downtrend in the pair. Disappointing German Industrial Production this morning sent the Euro lower. Recently German economic data has been weak as the Eurozone crisis that began in the periphery has begun recently to reach the core, which in this case in Germany and France. If the German and French economies wilt this will be a large blow to Eurozone GDP and will continue to pressure the Euro lower. The most important data released in the US today is the Jolts Job Openings data that will allow the market to gauge the recovery in the US Labor market. There will be little economic data on the EUR and USD until the FOMC Meeting Minutes at 18:00GMT tomorrow evening. This could be a large event for Fx markets, Stock Indices and Commodities. At present the Euro is under pressure with the pair below 1.30 and still trading below the downtrend channel as seen in the H4. As long as the pair remains below 1.30 and below the downtrend channel, the bias remains bearish.
EURUSD Support areas include 1.2600 1.2500, 1.2425, 1.2300 followed by 1.2200. Resistance levels above are at 1.2600, 1.2700, 1.2800, 1.2900 1.2959, 1.30 figure level, followed by 1.3165.
USDJPY 5 Min Chart
USDJPY Hourly Chart
The USDJPY has declined 100 pips to trade at 108.40, vindicating our analysis from yesterday where we anticipated a decline in the Dollar/Yen. Here follows our logic from yesterday's analysis piece:
" The USDJPY reached 109.90 during the USD rally that followed the NFP. The USDJPY had reached above 110 on Oct 1st and made a sharp pull back to 108. Once the good employment data was released the pair rose sharply but could not exceed previous higher, forming what appears to be a classic head and shoulder formations on the H1. The ominous sign in the chart is that the right shoulder is lower than the left and strengthening the case further is the fact that EURUSD, GBPUSD, AUDUSD, USDCHF and Gold all made new lows, but the YEN did not. If the pair goes below 109 and consequently 108.40 then this could signal a possible reversal pattern. The pair is around the 109.37 and the 108.40 support level remains key."
The decline from 109.37 to 108.40 occurred as seen in the M5 chart. So far the price has held at the key 108.40 level, a break below could set the trend for greater declines in the pair. Overnight data from Japan in the form of the Monetary Policy Statement, Leading Indicators and the BOJ Press Conference, did little to stem the tide of a strengthening Yen.
Support levels for USDJPY can be seen at 108.39, 107.50, 106.50. Resistance to the upside at 109.25, 110, 111, 112, 113.
The GBPUSD rose above the key 1.6000 level and in the process extended as high as 1.6120. From the lows of 1.5950 to the high was a 170 (1.7cents) pip move which equates to just over 1%. The pair has now settled back to 1.6080 and needs to hold above 1.6085 to maintain bullish momentum. The British sterling pound has been under severe pressure declining 4% since the positive outcome of the Scottish Referendum in September. Friday's decline sent the pound to an 11 month low against the US Dollar and the pound responded well breaking back above the important 1.60 level. Above this morning's high of 1.6120, the 1.6275 level is an important pivot point for the pair in establishing a drive higher. On the downside the next support is at 1.5900 followed by 1.5850, below this there is a support at 1.5715 and then little support until 1.5415. Yesterday's recovery occurred on a day of little or no economic data. Today just out, GBP Manufacturing Production and Industrial Production were reported below forecasts disappointing the market with 0.1% and 0.0% respectively, ending a recent improvement in these two measures. Later we await the UK 30-y Bond Auction as well as the NIESR GDP Estimate.
Support levels for the GBPUSD can be seen at 1.6000, 1.5900, 1.5850, 1.5715, 1.5400, Resistance to the upside at 1.6000, 1.6100, 1.6200, 1.6275, 1.6350.