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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Dollar in Tight Range, Yen Volatile on G7 Rumors

Thu, Jan 25 2007, 15:27 GMT
by ActionForex.com Team

ActionForex.com

Forex Mid-Day Technical Report

Dollar in Tight Range, Yen Volatile on G7 Rumors

Dollar is still bounded in tight range against majors today after disappointing data from US and Eurozone. Dec existing home sales in US dropped slightly more than expected by 0.8% to 6.22m annualized rate, below consensus of 6.25m but is still slightly above Sep's low of 6.21m.

Released earlier today, Jan German Ifo business climate eased back a touch, hitting 107.9 with expectation of a rise to 109.0 from 108.7, on account of cautious business sentiment amid the introduction of the three percentage point hike in the VAT. Business expectations, indeed rose slightly from 102.5 to 103.2 while Current Situation index dropped mildly from 115.3 to 112.8. After all, sentiments remains upbeat even though it may have peaked after a 16-year high last month.

Yen remains volatile as speculations on G7 meeting continues to fly around. Yen was boosted earlier today on liquidation of carry trader on rumors that Eurozone finance ministers will include a forceful message about yen's weakness on its draft of common position for the upcoming G7 meeting. However, Deputy German economy minister Bernd Pfaffenbach said that Germany was currently not planning to put yen weakness on the meeting's agenda. Japan's top financial diplomat Hiroshi Watanabe also said that he did not think yen's weakness would be a topic in the meeting. Yen retreats as the day goes.

Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.

USD/JPY

Daily Pivots: (S1) 120.60; (P) 121.19; (R1) 121.74; More

USD/JPY's corrective fall from 121.77 was contained at 120.14 so far, after failing to break decisively through short term rising channel (now at 120.52). But still, further decline is still mildly in favor as long as USD/JPY stays below 121.19 resistance. As discussed before, sustained break of the channel, with bearish divergence condition in 4 hours MACD and RSI as background, will indicate the rise from 114.41 has completed and deeper correction should be seen towards 117.96 support (50% retracement of 114.41 to 121.77 at 118.09).

However, above 121.19 will indicate that the fall from 121.77 has completed and USD/JPY is still support by the mentioned rising channel. Another test of 121.77 high should then follow. Above 121.77 again will indicate recent rally has resumed for 123.23/29 cluster projection target.

In the bigger picture, as medium term rally from 108.99 is still in force, such rally is treated as resumption of whole up trend from 101.65 for the moment. Next upside target will be 123.23/29 cluster projection level (100% projection of 114.41 to 119.68 from 117.96 at 123.23. 100% projection of 108.99 to 117.87 from 114.41 at 123.29). However, decisive break of 117.96 support will rise some doubt about this case. In such case, a deeper decline should follow to retest medium term rising channel (now at 115.68) first.

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Published on  Thu, Jan 25 2007, 15:30 GMT