Post:
It was perhaps a surprisingly strong start to the week for the U.S. Dollar, especially given the way that given the meltdown in equities, and the relatively soft to mixed Non Farm Payrolls for January at 152,000, one might have expected the greenback to be on the back foot.
Presumably, the wait for the forthcoming speech from Fed Chair Janet Yellen has the market going for the idea of at least one more interest rate rise later this year.
Cable: Below 50 Day Line Risks $1.4150
The points to note here on the daily chart are the way that this market missed hitting the 50 day moving average now at $1.4684, with the initial journey for Monday back to the 10 day moving average at $1.4410. The risk now is that an end of day close back below the 10 day line later today could lead this cross back to the last January support at $1.4150 as soon as the end of this week. This is especially so given the loss of the neutral RSI 50 level to leave it at 46.
Euro/Dollar: Test Of 200 Day Line Ahead Of $1.15 Plus
It really does look as though the move by the Bank of Japan to reduce interest rates to a negative level was the last throw of the dice as far as getting growth / inflation back into the economy. However, the sharp decline in Dollar / Yen from above 120 and the 200 day moving average at 121.43 implies that traders have picked on this desperate move as suggesting that the much vaunted Three Arrows strategy to stimulate the economy is all but out of momentum. This leaves the cross starting the main 115.50 – 116 support zone of the past year and more in the face, with the likelihood being that as little as an end of day close back below 115.57 – the December 2014 low could trigger a multi Yen move to the downside.
On this basis former October 2014 resistance at 110 looks to be the best that the bulls may get away with over the next 4-6 weeks.
Only back above the 10 day moving average at 118.55 would even begin to delay the breakdown argument.
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