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Daily Forex Technical Report − ECB & BOE Watched, Yen and Kiwi Sold off

Thu, Jun 5 2008, 08:18 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

ECB & BOE Watched, Yen and Kiwi Sold off

ECB rate decision and the post meeting press conference takes center stage today. ECB is widely expected to keep rates unchanged at 4.00%. Meanwhile, with record inflation of 3.6% yoy, Trichet is expected to maintain the hawkish tone and re-emphasize ECB's mandate of price stability. Though, recent indicators are starting to show evidence of slowing economy in the Eurozone and markets' focus is on whether Trichet will soften the tone a bit. BoE is also widely expected to keep rates unchanged at 5.00%. No statement is expected from BoE and the announcement will likely be a non-event.

Technically speaking, Euro and Sterling remains soft against dollar after Bernanke's hawkish comments in the past two days. Though relatively speaking, EUR/USD's downside momentum is diminishing a bit as the common currency is being supported in EUR/JPY and EUR/CHF crosses. While further downside is still expected in both pairs, markets will probably remain indecisive until tomorrow's Non-Farm Payroll. On the other hand, yen weakens across the board, led by rally in USD/JPY.

Other data to be released today include Germany Factory orders and US jobless claims. Moreover, Canadian building permits and Ivey PMI will be closely watched. Though, the Canadian dollar, which has be in free fall this week, is not expected to draw much support from the data today.

RBNZ left rates unchanged at 8.25% overnight. Kiwi was sold off immediately after a rather dovish statement that signals the central bank may cut rates for the first time since 2003. Aussie, on the other hand, was supported by narrow than expected trade deficit which shrank to -957m in Apr.

More Technical Analysis Reports Here

USD/JPY Daily Outlook

Daily Pivots: (S1) 104.71; (P) 105.03; (R1) 105.53; More.

USD/JPY's rise from 102.73 resumes today after taking out 105.87 resistance and surges to as high as 106.10 so far. As discussed before, the whole rise from 95.77 is expected to extend further to 38.2% retracement of 124.13 to 95.77 at 106.60 first and probably further towards 108.59 resistance. On the downside, below 104.53 will argue that rise from 102.73 has completed and will 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 is probably still in progress but has already entered resistance zone of 104.96/108.59. Resistance should continues to build up as USD/JPY approaches 108.59 medium term resistance. Failure below there, followed by break of 102.58 support will indicate that such rise from 95.77 has possibly completed and will shift short term bias back to the downside. However, decisive break of 108.59 will confirm that this down trend has completed already. In such case, stronger medium term rebound should then be seen to retest 114.77 resistance first.

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Published on  Thu, Jun 5 2008, 08:21 GMT