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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Yen Maintains Momentum as Risk Aversion Dominates

Fri, May 9 2008, 13:07 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Yen Maintains Momentum as Risk Aversion Dominates

Yen remains strong today and extends it's strength across the board in early US session. Yen buying was triggered on risk aversion following 2% fall in Nikkei. Momentum continues with European stock markets down and US set to have a lower open. In addition to the concern over credit market crisis, markets are starting to shift the focus to inflationary pressures, in particular with oil prices breaking into $125 per barrel.

Canadian dollar also strengthens broadly after release by better than expected job report. The Canadian economy added 19.2k jobs in Apr, much higher than consensus of 12.5k. Unemployment rate was up from 6.0% to 6.1% but that was mainly due to large in labor force. Canadian trade surplus came in wider than expected at 5.5b. Dollar on the other hand, is mixed. Trade deficit in US unexpected shrank back to below -60b at -58.2b.

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USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 103.11; (P) 104.03; (R1) 104.65; More.

USD/JPY's fall from 105.70 continues today and extends further to as low as 102.61 in early US session. At this point, intraday bias remains on the downside as long as 103.62 minor resistance holds. As discussed before, bearish divergence conditions in 4 hours MACD and RSI argues that whole rebound from 95.77 is over. Break of mentioned channel support will add more credence to this case and put 100.02 support into focus. Break will confirm and encourage a retest of 95.77 low. On the upside, though, above 103.62 will indicate an intraday low is in place and turn outlook neutral first.

In the bigger picture, USD/JPY has made a medium term bottom after down trend from 124.13 has just met 76.4% retracement of 79.75 to 147.68 at 95.78. The rebound from there has met upside target of 104.96/108.59 resistance zone already. Failure below 108.59, followed by break of 100.02 support will firstly indicate rebound from 95.77 has completed. Secondly, it will keep the lower higher, lower lows pattern intact and suggest that down trend from 124.13 is still in force.

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Published on  Fri, May 9 2008, 13:11 GMT