• Home ::
• Technical ::
• Analysis Reports ::
• Daily Forex Technical Report

• Send
• Print
• Add To
• Rss

63f06934-c17e-4321-afdb-5113591afb22

0

0

Daily Forex Technical Report − Yen Extends Rally, More Upside Expected

Fri, Aug 10 2007, 08:16 GMT
by ActionForex.com Team

ActionForex.com

Forex Daily Technical Report

Yen Extends Rally, More Upside Expected

Riding on global fear further problems in the credit markets and tumbling US and Asian stock markets, the Japanese yen extends rally today and remains firm into European session. So far, AUD/JPY and NZD/JPY were most hit, both taking out last week's low of 99.42 and 88.56 respectively and reaching as low as 90.03 and 87.27. Meanwhile, dollar continues to ride on this carry trade unwinding flows and heads higher against both European majors and commodity currencies.

Joining Fed and ECB, BoJ added 1 trillion yen to the financial system to avoid drying up of liquidity by the credit crunch. RBA also added A$ 49.5b, the most since Jan 03. ECB said yesterday that it would provide unlimited cash in response to a sudden demand for capital from lenders roiled by the subprime mortgage losses and loaned 94.8b euros after Paris-based BNP Paribas suspended redemption from three funds. Fed added $24b in temporary reserves to the system

Data released in Asian session saw Japan domestic CGPI rose 0.6% mom, 2.% yoy in Jul. Capacity utilization rose slightly to 105.8 while industrial production accelerated to 1.l1% yoy in Jun. Consumer confidence dropped to 44.6, lowest since Dec 04, in Jul. Upcoming data include unemployment rate and export/import prices from US as well as Fed budget. However, markets will continue to be much more sensitive to the development of credit crunch as well as reactions in the stock markets.

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

USD/JPY

Daily Pivots: (S1) 117.61; (P) 118.68; (R1) 119.22; More

USD/JPY extends lower to 117.70 today and break of 117.97 support confirms that rebound from 117.15 has completed with three waves up to 119.80, just missing 119.81/89 cluster resistance (100% projection of 117.15 to 119.07 from 117.97 at 119.89 and 38.2% retracement of 124.13 to 117.15 at 119.81). At this point, further decline is expected to follow as long as 118.87 resistance holds. Retest of 117.15 low should be seen and break will confirm recent sharp decline from 124.13 has resumed for 114.41/115.13 support zone. Above 118.87 will turn intraday outlook neutral and indicates that price actions from 117.15 is developing into further consolidation with another test of 119.81/89 cluster resistance before completion.

In the bigger picture, break of 118.35/57 cluster support zone (38.2% retracement of 108.99 to 124.13 at 118.35 and 61.8% retracement of 115.13 to 124.13 at 118.57) has also had medium term rising trend line (108.99 to 155.13, now at 118.39) taken out. Sustained trading below these levels argues that whole rise from 108.99 has completed. In such case, much deeper decline should then be seen to long term rising trend line support (now at 115.70) and then further to next important support zone of 114.41 and 115.13 (61.8% retracement of 108.99 to 124.13 at 114.77).

Sustained break of 114.41/115.13 support zone will strongly suggest that the whole multi year up trend from 101.65 is already completed and much stronger and sustainable rally in the Japanese yen should then be seen in medium term. However, note that strong rebound above 114.41/115.13 support zone or a break above 122.40 will save the case that long term up trend from 101.65 is still in force for another test of 124.13 high at least before completion.

Stay tuned with our Forex Newsletters

ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.

Published on  Fri, Aug 10 2007, 08:15 GMT