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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Sterling Tumbles Further, Euro Still in Range

Fri, Feb 9 2007, 14:31 GMT
by ActionForex.com Team

ActionForex.com

Forex Mid-Day Technical Report

Sterling Tumbles Further, Euro Still in Range

Sterling continues to weaken across the board today with GBP/USD breaking last week's low of 1.9480 and EUR/GBP breaking through 0.6670 resistance. Sterling's weakness was triggered by BoE's on-hold decision yesterday and further fueled by worse than expected trade deficit which widened to 7.142b from 7.9b. The report highlighted that UK's exporters are struggling with the high exchange rate of Sterling as exports fell 1.2%. Euro weakens mildly against dollar today but is basically still kept in range. Meanwhile the Japanese yen continues to edge lower as G7 meeting starts today and speculation on yen will be mentioned in the communique fades.

Canadian dollar is boosted higher today after stronger than expected employment report which started the year by adding 89k jobs in Jan, much higher than expectation of 13.5k.

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

USD/JPY

Daily Pivots: (S1) 120.59; (P) 121.00; (R1) 121.44; More

USD/JPY's rise from 119.94 extends further to as high as 121.62 today. As discussed before, the corrective fall from 122.17 should have completed at 119.94 already. Hence, at this point, further rally is expected to follow to retest 122.17 high as long as 120.96 minor support holds. Decisive break of 122.17 will confirm rally from 114.41 has resumed. Touching of 120.95 will turn intraday outlook consolidative first.

In the bigger picture, with medium term up trend from 108.99 remains in force, favor is still on the case that rise from 108.99 represents resumption of long term up trend from 101.66. The preferred interpretation of the rise from 108.99 is that the first move has completed at 117.87. Subsequent price actions to 113.95, 119.86 and 114.41 is treated as interim consolidation that's skewed upward by the rise to 119.86. Rise from 114.41 is treated as resumption of the whole up trend. With this interpretation, next upside target will be 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 interpretation In such case, a deeper decline should follow to retest medium term rising channel (now at 115.68) first. A break of this channel will swing favors back to the case that another medium term decline should be seen towards 108.99 low before completing the whole long term consolidation that started at 121.38.

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Published on  Fri, Feb 9 2007, 14:29 GMT