The EURUSD rose sharply to touch 1.2791, taking the weekly gains to just under 300 pips so far this week. The FOMC Meeting Minutes helped equity markets rise and led to a US Dollar sell-off based on the impression that the Federal Reserve will maintain a near zero interest rate policy amidst slowing global growth. The pair broke above the key levels discussed in previous reports of 1.2700 and 1.2725, and has subsequently opened up the potential of a reversal of the recent downtrend in the pair. The pair is now trading at 1.2772 just off the highs. Today there is a key Fx announcement of the GBP Official Bank Rate. French and German Trade Balance data was weaker than anticipated earlier this morning. Today is also the start of the G20 Meetings and any major announcements could impact financial markets. 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 1.2700 1.2600, 1.2500, 1.2425. Resistance levels above are at 1.2800, 1.2900,1.30 figure level, followed by 1.3165.
The USDJPY decline continues to unfold and the pair is back at 107.65. On Monday we hit our first target of 108.40 and yesterday we went through and reached 108.08. The pair has broke cleanly below the 108.40 level reaching as low as 107.60. The pair has now turned to a short-term downward bias. As long as the pair holds below 108.40 the bias remains down. A concerted break above this level could shift the pair back into an uptrend. Please see below our analysis from Monday morning. Here follows our logic from Monday's analysis piece:
" The USDJPY reached 109.90 during the USD rally that followed the US 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."
Here is Wednesdays analysis: "The decline from 109.37 to 108.40 occurred on Monday as seen in the M15 chart, and consequently broke through the key 108.40 level. Now we anticipate a further pullback on the USDJPY."
Our forecasts have correctly anticipated the price action in the pair each day this week. The price is now 107.65.
Overnight the Japanese Core Machinery Orders were announced better than forecasted and helped to strengthen the Yen vs the Dollar. Overnight the highlight of the Japanese data will be the Monetary Policy Meeting Minutes out of the BOJ (Bank of Japan).
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.
USDJPY Hourly Chart
Crude Oil slumped further falling as low as $86.80 during yesterday's session. The price has since recovered somewhat stopping just short of $87.95. A break below $84 will set an 18 month low and if the market makes its way down below $74 this will be a level unseen since 2010. Last week Crude declined $7 dollars from high to low and posted a decline of $5 from open to close, ie 6% in a week. This week is already turning in to a similar picture with crude down as much as $3.00 and more than 3.5% coming towards the end of this week. Yesterday's US Crude Oil Inventories, increased by 5.1 million barrels exceeding the expectations of an increase in stockpiles of 2.1million barrels. The large build in reserves keeps the pressure on the price of Crude Oil.
Support levels for the Crude Oilcan be seen at $87.00, $86.00, $85, $83.50. Resistance to the upside at $88, $89, $90, $92.