FX Technical Analysis

EURUSD

Comment: Consolidating above retracement support, between the 9-day and 26-day moving averages. A daily close clearly above 1.4100 should increase bullish momentum, avoiding another cautious downside probe.

Strategy: Buy at 1.4035; stop well below 1.3900. Short term target 1.4100, then 1.4250 and this mont's high at 1.4339.

Direction of Trade: →↗

Chart Levels:

Support	Resistance
1.3967 "	1.4063
1.39	1.41
1.385	1.4145*
1.3800*	1.417
1.3725	1.425

GBPUSD

Comment: The pound is the best performing currency this week, despite the government and a tube strike in London, taking GBP/JPY to its highest level since early November. Cable is now consolidating above the 9-day moving average, it is not overbought, and bullish momentum is stronger than it has been since at least 1993.

Strategy: Attempt longs at 1.6400, adding to 1.6230; stop well below 1.6000. First target 1.6475, then 1.6650.

Direction of Trade: →↗

Chart Levels:

Support	Resistance
1.6345 "	1.6436
1.623	1.6475
1.614	1.65
1.605	1.6595
1.594	1.6664*

USDJPY

Comment: Trading either side of a thin Ichimoku ‘cloud', above moving averages, having traded in a broad band roughly between 94.00 and 100.00 since March. Expect more cautious random small swings today and tomorrow.

Strategy: Possibly attempt small shorts at 98.00, adding to 98.45; stop above 99.25. First target 97.50 then 97.00.

Direction of Trade: →

Chart Levels:

Support	Resistance
97.72 "	98.3
97.5	98.45/98.58
97.25	98.7
97	98.85/99.00*
96.65	99.8

EURJPY

Comment: Holding surprisingly neatly above the 9-day moving average at 136.58 again today, hovering either side of April's high at 137.42. We shall continue to allow for more work either side of this area all week.

Strategy: Possibly attempt small shorts at 137.45; stop above 138.50 Short term target 136.50, maybe 135.00.

Direction of Trade: →

Chart Levels:

Support	Resistance
136.69/136.58 "	137.8
136.25	138.02
135.7	138.20/138.33
135	138.57
134	139.26*

Fundamental Analysis
We saw some see-saw action on the EU and GU and while the turn towards a longer term downtrend is still the higher probability here, we could face some further strength in the near term, especially if we get good retail sales out of the U.S. and/or bullish equity markets on Thursday. EUR/USD will likely trade short term bullish working towards the highs around 1.4140 or even the 78% retracement at 1.4211 before capping out and turning lower. Stocks right now seemed to have formed yet another triangle pattern, this one with short term bullish implications. From what I can see is that there's about a 70% chance we trade up to new highs on the S&P in the 965-985 range over the next 4-10 days before turning the corner for a very deep selloff. The other 30% chance is that we manage to break through the 920-923 support shelf before hitting new highs and start the steep selloff now. On Wednesday we got a buy signal on NZD/USD that gave plenty of time to get in and managed a nice 70-100+ pip rally depending on how long you stayed in. AUD/USD also gave a near buy signal and managed to rocket up 70 pips as well going much further than I thought, so some decent price action yesterday. For tomorrow's news, there's only one worth trading:

0830 US Core Retail Sales (+0.2% expected) - We've seen some very nice trades with strong price action on this report with relatively small deviations, so look for a nice trade here if we get a surprise.
If it comes out at +0.7% or higher, EUR/JPY should rally 50+ pips.
If it comes out at -0.3% or lower, EUR/JPY should sell off 50+ pips.

We're also getting NZ Retail Sales, but this number rarely gets worthwhile price action, so it's probably better to play it safe and stay out of it.

*EDIT* at around 0235 we had some USD bullish commentary from the ECB about SDR's not being able to functionally replace USD as a reserve currency, so the short term EU and GU strength part of the picture may not play out as envisioned. Either way, the longer term trend is still very likely down on both pairs.