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Daily Forex Technical Report

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Daily Forex Technical Report − Dollar and Yen Pare Overnight Gains as Stocks Rebound

Fri, Nov 21 2008, 07:48 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Dollar and Yen Pare Overnight Gains as Stocks Rebound

Dollar and yen give up some overnight again today as Asian stock markets rebound after opening sharply low. Risk aversion initially dominated the markets as S&P 500 tumbled 6.7% to11 year low of 752.44 and after more than a month of consolidation, DOW finally broke 7884 low in Oct 10 and closed at 7552. Crude oil dived below $49 level. Dollar index rode on risk aversion and surged to as high as 88.36. Nevertheless, the markets stabilized in Asia then and dollar and yen retreat.

While further upside is still expected in dollar and yen in near term, there are a few points to note. Firstly, EUR/USD remains bounded in converging range. Secondly, GBP/USD is also holding above prior low of 1.4557. Thirdly, yen crosses as mostly still holding above Oct's lows. So technically speaking, there is no confirmation that consolidations in these pairs have completed yet. Hence, near term levels in these pairs need to be watched closely for signals that consolidations are indeed still in progress. More information on this in our technical outlook reports.

On the data front, Eurozone flash PMIs will be the main focus today and are expected to show further deterioration in the manufacturing and services sectors. Canadian CPI is expected to drop -0.6% mom in OCt, bringing year-on-year rate down from 3.4% to 0%. Core CPI is expected to rise 0% mom with yoy rate up to 1.9%.

BoJ left rates unchanged at 0.3% as widely expected.

More Forex Technical Analysis Reports Here.

USD/JPY Daily Outlook

Daily Pivots: (S1) 92.76; (P) 94.49; (R1) 95.44; More.

USD/JPY dives further to as low as 93.55 before recovering mildly. At this point, intraday bias remains on the downside as long as 96.24 minor resistance holds. Further fall is expected to retest 90.92 low first. On the upside, above 96.24 will turn intraday outlook neutral again. Also, further break of 98.18 resistance will indicate that fall from 100.54 has completed. Also, this will revive the case that correction from 90.92 is still in progress for another rise to 100.54 and above before completion.

In the bigger picture, as long as 103.06 cluster resistance (61.8% retracement of 110.66 to 90.92 at 103.11) holds, medium term outlook remains bearish. Prior break of 95.77 low confirms that whole down trend from 124.13 has resumed and should target 100% projection of 124.13 to 95.77 from 110.66 at 82.3 next. Also, note that the current development clears out the long term picture too. Price actions that started from 79.75 (95 low) has completed in form of a triangle that ended with five waves to 124.13. In other words fall from 124.13 is just part of an even larger scale down trend which could extend further to retest 79.75 low.

On the upside, sustained break of 103.06 cluster resistance will firstly argue that fall from 110.66 has completed. Secondly, it will also argue that a medium term low is in place at 90.92 and outlook will be turned neutral with focus back to 110.66 high.

For Crude Oil and Gold analysis, click here

Published on  Fri, Nov 21 2008, 08:01 GMT