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Daily Forex Technical Report

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Daily Forex Technical Report − Yen Lower after Weak CPI, Dollar Awaits Durable Goods and Housing

Fri, Jan 26 2007, 07:56 GMT
by ActionForex.com Team

ActionForex.com

Forex Daily Technical Report

Yen Lower after Weak CPI, Dollar Awaits Durable Goods and Housing

Dollar strengthens mildly inside established range ahead of durable goods order and new homes sales data today. Ex transport orders is expected to rebound in Dec by rising 0.5%, after a 1.1% fall in Nov. Thus, headline orders is expected to rise by 2.5%, comparing to prior month's 1.6%. New home sales is expected to be steady at 1.05m annualized rate. Euro edges lower against dollar ahead of Dec M3 money supply release. Money supply growth, which accelerated to 9.3% yoy, remains a concern of the ECB. Dec M3 growth is expected to slow slightly to 9.2%

The Japanese yen continues to trade with an undertone after weak inflation data released overnight. Japanese headline CPI was flat in Dec with yoy increase staying at 0.3%. More importantly, core CPI slowed from 0.2% yoy growth to 0.1%. Upward pricing pressure in Japan remains non-existent and, with CPI running along at just a shade above zero, there is no reason to believe that an outbreak in inflation in imminent.

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

USD/JPY

Daily Pivots: (S1) 120.53; (P) 120.90; (R1) 121.62; More

USD/JPY rebounded strongly after corrective fall from 121.77 was contained at 120.16, supported by short term rising channel. At this point further rise is expected to follow to retest 121.77 resistance as long as USD/JPY stays above 120.88 support. Break will encourage further rally to next upside target of 123.23/29 cluster projection target.

On the downside, below 120.88 will suggest that consolidation from 121.77 is still in progress and could bring another fall to 120.16 or lower. In such case, also with sustained break of the short term rising channel (now at 120.66), and 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).

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  Fri, Jan 26 2007, 07:55 GMT