Analys från DailyFX
Japanese Yen Technical Anlalysis: USD Rolls Over, EUR Unbound
Talking Points:
- With a lower high confirmed for USD/JPY, the year’s lows beckon
- However, support here has seen strong defense before
- EUR/JPY looks bullish but may be too tired for more short-term gains
Where does the Japanese Yen stand in traders’ affections right now? Take a look at the DailyFX Sentiment Guide
The latest bounce of US Dollar weakness has come at an interesting point for the USD/JPY pair.
Having confirmed another lower high in the past week or so, the US Dollar has crumbled toward that interesting support zone in which the gap between two significant intraday lows (those of June 14 and April 17) guards 2017’s overall nadir. That’s the 108.11 level set on April 14.
This support zone has seen steadfast defence since the first approach on August 10, but current bearish conviction seems to be of a different order than anything seen before. It has already taken USD/JPY towards the bottom of that support zone and, at the time of writing – 03:00 GMT Friday – a daily close below it seems all-too likely.
Should bulls gird themselves for one final desperate defence, then USD/JPY will remain under pressure from a well-entrenched downtrend. In all likelihood, the day of reckoning will merely have been postponed.
Should 2017’s low give way on this attempt then many if not quite all bets will be off and the long climb up from November’s lows in the 103-area will be back in play. That rise came about as part of the so-called “Trump trade” in which investors got over their shock at Donald Trump’s presidential win and decided to back the Dollar, hoping for a raft of business-friendly policies. Now not so much, it seems.
The Japanese Yen’s fortunes against a resurgent Euro, meanwhile, could hardly be more different. The single currency has the Yen on the ropes, having made new highs against it at the end of August. However, while momentum indicators don’t suggest that the bulls have had their fill yet, EUR/JPY has only just managed to scrape back above a notable short-term uptrend channel. Even if September 5’s slip below its lower boundary was spurious, it might pay the uncommitted to sit back a day or two to see how things develop. While the Euro doesn’t look to be in any kind of trouble, it remains to be seen whether its numerous current bulls have the appetite to push the year’s top any higher.
Why not wait and see whether we have a genuine resumption of the current uptrend? It should only take a day or so.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter:@DavidCottleFX
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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