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Daily Forex Technical Report

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Mid−Day Forex Technical Report − Yen Firm as Investors Remain Cautious

Fri, Sep 26 2008, 13:44 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Yen Firm as Investors Remain Cautious

Yen remains firm in early US session following lower open in the US stock markets. Investors continue to cautiously await conclusion of the rescue package but the debate will probably drag on for a while. US real GDP growth in Q2 was unexpectedly revised down from 3.3% to 2.8%. while consensus expected no revision. Looking into the details, there were downward revisions to exports, consumer spending and business investments and that offset upward revision to non-residential construction. In particular, personal consumption growth was revised down from 1.7% to 1.2%. Price index was revised up to 1.3%. Core PCE is revised up from 2.1% to 2.2% too.

Released earlier today, Swiss KOF leading indicators hit five year low of 0.62 in Sep. but was better than expectation of 0.56. Germany import price dropped less than expected by -0.8% mom in Aug, with yoy rate unchanged at 9.3%. New Zealand GDP dropped less than expected by -0.2% qoq in Q2 with yoy rate slowed less than expected to 1.0%. Japan CPI moderated unexpectedly to 2.1% yoy in Aug with core CPI flat.

More Forex Technical Analysis Reports Here.

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4523; (P) 1.4646; (R1) 1.4730; More

EUR/USD continues to trade with a soft today but is still supported above 1.4542 so far. Nevertheless, with 4 hours MACD staying below signal line, intraday bias remains mildly on the downside as long as 1.4700 minor resistance holds. Break of 1.4542 support will be the first indication that rebound from 1.3881 has completed. Further break of 1.4150 support will confirm this case and bring retest of 1.3881 low and key medium term support at 1.3851. On the upside, while another rise cannot be ruled out, since rebound from 1.3881 is treated as correction to fall from 1.6038 only, upside is still expected to be limited by 1.4908 resistance and bring fall resumption.

In the bigger picture, medium term up trend from 1.1639 has completed at 1.6038, after a double top reversal pattern (1.6019, 1.6038) and subsequent decisive break of medium term rising trend line support. A short term bottom is in place at 1.3881, above key medium term support at 1.3851 (50% retracement of 1.1639 to 1.6038 at 1.3839). Rebound from there is treated as correction to fall from 1.6038 only and is expected to complete in 1.4629 and 1.4908 resistance zone. The whole decline from 1.6038 is still expected to extend further after completing the correction. Sustained trading below 1.3851 will indicate that fall from 1.6038 has resumed to next target of 61.8% retracement of 1.1639 to 1.6038 at 1.3319 first. On the upside, sustained break of double top neckline resistance at 1.5284 is needed to confirm decline from 1.6038 has completely finished. Otherwise, medium term outlook will remain bearish.

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Published on  Fri, Sep 26 2008, 13:49 GMT