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Daily Forex Technical Report − EUR/JPY Surges to New Record High Post G7

Mon, Apr 16 2007, 07:11 GMT
by ActionForex.com Team

ActionForex.com

Forex Daily Technical Report

EUR/JPY Surges to New Record High Post G7

EUR/JPY surged further to new record high of 162.42 today on post G7 buying. On the one hand, yen weakened as carry trade in back in play again since G7 did not comment specifically on yen's weakness. Both AUD/JPY and NZD/JPY gapped higher today. On the other hand, euro was additionally supported after upbeat comments from Eurozone officials, including Dutch Central Bank Governor Nout Wellink who said in an interview that "a strong euro is in the interest of Europe" which seems to be an endorsement of Euro's strength against dollar and yen. Dollar also weakened against Euro, Sterling and commodity currencies as the week starts.

Focus is now turning to UK PPI inflation and US retail sales today. Mar PPI input price in UK is expected to continue rebound from -1.1% to 0.2% yoy while PPI output is expected remain steady at 2.2% yoy. Core PPI is expected to remain at 2.7% too. After two months of weakness, Jan (flat with ex-auto rose 0.2% only) and Feb (rose 0.1% with ex-auto dropped -0.1%), retail sales in US is expected rebound by rising 0.4% with ex-auto sales rising 0.6% in Mar. Empire state manufacturing index and TIC capital flow will also be featured today.

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

EUR/JPY

Daily Pivots: (S1) 160.32; (P) 160.87; (R1) 161.85; More

EUR/JPY surges further to new record high of 162.42 today. At this point, intraday bias remains on the upside as long as EUR/JPY stays above 161.16 minor support. As discussed before, sustained trading above both medium term and short term channel resistance will indicate that the current rally is stronger than we originally thought and should bring further rise towards 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64 first. On the downside, below 161.16 minor support will indicate and intraday top is formed and bring pull back. Break of 159.91 support will warn that the rally from 150.75 has completed and bring retest of short term rising channel support (now at 158.38).

In the bigger picture, we're treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 with a diagonal triangle already. Fourth wave correction has ended at 150.75 and rise from there represents the final advance in this structure. The channeling property of 143.60, 137.16, 159.63 and 150.75 is supporting this case.

Having said that, risk of a medium term reversal is also increasing with EUR/JPY now pressing the medium term channel resistance. Break of the short term channel support indicate that rise from 150.75 has completed and give a serious warning signal that the whole rise rise from 130.60 has ended. Focus will then turn to medium term channel support (now at 152.23). However, sustained break of the mentioned channel resistance will suggest that the underlying outlook is more bullish than we thought and will path the way towards 61.8% projection of 137.16 to 159.63 from 150.75 at 164.64.

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Published on  Mon, Apr 16 2007, 07:13 GMT