USD/JPY
Chart Levels:
Support 90.00..89.70..88.00..87.10.
Resistance 91.00..92.50..93.55..94.65
This week: ↘ This month: ↘
Almost the lowest weekly close of 2009, and well below the mid-point of the very broad sideways band that has held all year, suggests a series of repeated downside tests for the rest of this month and maybe the rest of this year. A baptism by fire for the new DJP government that has had to wait 50 years to be elected into power. Verbal intervention has started already, the MOF's Tango saying today he is watching currency moves closely. Key support between 87.00 and 1995's 85.00 may not be defended quite as rigorously by new politicians whose focus is more on the individual and less on corporations. The US dollar is not as oversold against the Yen as we had thought and most Yen crosses are looking top-heavy.
EUR/USD
Chart Levels:
Support 1.4500..1.4400..1.4290..1.4177.
Resistance 1.4636..1.4720..1.4815..1.4900.
This week: → This month: ↗
Mocking the consensus view, the Euro has retraced 61.8% of last year's losses. Using a flat-topped Ichimoku 'cloud' as a springboard it has moved above the consolidation area that we have been trapped in for weeks. Best volume so far this year in the futures contracts suggests many are rushing to catch up, reviewing their FX outlook as necessary. One-month at-the-money implied volatility based against the 10.00% level, and should pick up towards 16.00% over the coming month or two. Note that on the ECB's effective exchange rate the Euro is at a record high, yet what we are seeing is generalised US dollar weakness with the best performers so far this year the ZAR, BRL, AUD and NZD.
GBP/USD
Chart Levels:
Support 1.6500..1.6275..1.6100..1.6000.
Resistance 1.6745..1.6800..1.7045..1.7250.
This week: → This month: ↗
Cable continues to consolidate above the Fibonacci 38% retracement of the drop since 2007's high and below the flat top of a massive Ichimoku 'cloud'. A pity it didn't manage a weekly close above 1.6750 as this might have added some much-needed bullish momentum. Cable is not overbought and moving averages have been suggesting a long position since May, the 26-week one starting at last to move higher. Measured targets from current consolidation lie at 1.7000 and then 1.7500. Futures volume remains excellent and possibly, like the Canadian and Eurodollar futures, have been embraced by US speculators. One-month at-the-money implied volatility should hold above 10.65% for quite some time to come.
GBP/JPY
Chart Levels:
Support 149.00..146.70..143.00..139.00.
Resistance 153.25..155.85..156.00..157.50
This week: ↘ This month: ↘
The 'double top' against the 162.50 should lead to a re-test of June's low at 146.70, with a sustained break below here setting off a (probably sharp) drop to a measured target at 130.00. This would of course involve a break below the bottom of the very large Ichimoku 'cloud' (144.65) which should then turn moving averages bearish. One-month at-the-money implied volatility is still trying to base against 16.40%, one standard deviation from the mean since January 1995, and should eventually increase towards 21.00%. Note that so far this month the Yen has gained against all major currencies, a move which we feel will gather momentum over the next six weeks or so, Asian ones the weakest.
Euro May Rise Toward $1.4720 After Rebound
The euro may advance against the dollar toward its December 2008 high of $1.4720 after the European currency rebounded from so-called support around $1.4500, BNP Paribas SA said, citing trading patterns.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aL2HM57q.7F8
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