Downward revision of Q4 2014 Japanese GDP, published on Sunday, fueled speculations that the Bank of Japan shouldn’t stop in its lose monetary policy measures, the news weakened Japanese Yen (JPY) against majority of its counterparts during Monday. Moreover, optimistic US labor market details, published last weekend, diverted some of the safe haven funds to the greenback from its Japanese counterpart. On Tuesday, the JPY weakened to the eight year low against USD while testing the strongest level in near two years against EUR. However, the Japanese currency continued its sideways trading against GBP and testing the month’s high against the AUD. With lesser economic cues scheduled market players are likely to maintain their early-week trading practices unless any surprises pops from US Retails Sales or Australian labor market numbers.
Meanwhile, here’s brief technical overview of important JPY pairs – USDJPY, EURJPY, GBPJPY and AUDJPY.
Even if the USDJPY did test eight years highs on Tuesday, ascending trend channel top, near 122 psychological mark, restricted pair’s up-move; however, this doesn’t signal a major pullback into the pair prices as it continue its upward trajectory on Tuesday and is likely to re-test the resistance line before accelerating it advance towards testing 61.8% FE of its October – December 2014 up-move, near 123.30. Moreover, sustained trading above 123.30 could provide addition fuel to the pair to test 2002 highs, near 125.80 with 124.15, 2007 high being intermediate resistance. Alternatively, resistance-turned-support line, near 120 mark, could provide immediate support to the pair, breaking which the 50-day SMA and the channel support, near 118.75, could restrict near-term decline of the pair. Further, a break of 118.75 could extend the pair’s decline towards 117-116.90 horizontal support-zone.
On Tuesday, the EURJPY plunged to the lowest level in near two years by breaking the 61.8% FE of its January decline and is likely stretching its downward journey to test 128 horizontal support. A break of 128 could make the pair vulnerable to test 100% FE, near 125 mark with 126.30 and 126 being intermediate support levels. On the upside, 129.50, including 61.8% FE, and the 130.80, could restrict pair’s immediate up-move before it rallies to 132.40 horizontal resistance, breaking which the pair can immediately rally to descending trend-line resistance 134.80 at present, which becomes important resistance to determine medium-term EURJPY moves.
100-day SMA, presently at 182.10, continue providing strong support to the GBPJPY; however, descending trend-line resistance, stretched from late December, together with the 3.6% Fibonacci Retracement of its October – December up-move, near 184.60, restricts near-term up-move of the pair. Comparatively stronger GBP suggests more of the up-move towards testing 186 and the horizontal line resistance of 187.50. On the break of 187.50 the pair is more likely to rally towards testing 190 mark. On the downside, a break of 182.10 is closely followed by the 38.2% Fibonacci support of 181.40, breaking which the pair declines to 179.20 and the 178.80, including 50% Fibo. An extended decline below 178.80 could make the pair test 61.8% Fibo, near 176.30 support.
Sustained break of falling wedge bearish formation continue signaling AUDJPY decline towards 90.70 horizontal mark; however, a break of 23.6% Fibonacci Retracement of its November – February decline, near 92.50, becomes necessary. Should the pair breaks the 90.70, February lows, near 89.30, could restrict pair’s downturn to February 2014 lows of 88.20. However, a close above 92.50 could again fuel the pair back to 93 mark, breaking which the resistance-line of the formation, also including 38.2% Fibo, near 94.50, could provide consecutive resistance to the pair. Further, a sustained break of 94.50 could fuel the pair’s rally towards 96.00 and the 100-day SMA, presently at 96.35, before surging to 61.8% Fibo, near 97.60.
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