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Technical Research

Comprehensive FX and Futures Daily Research

Wed, Mar 25 2009, 08:52 GMT
by FastBrokers Research Team

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USD/JPY

The USD/JPY is struggling with our 3rd tier downtrend line as it tries to ascend past key February highs. The next 24-48 hours are crucial for the USD/JPY. For if the currency pair can climb past February highs then we will finally see a retest of 100 with the possibility of large near-term gains. On the other hand, if the USD/JPY can’t brave through February highs within this time frame, we could very well see the currency collapse back into its downtrend with a movement towards our near-term uptrend line. With key economic data coming from both Japan and the U.S. in the next 48 hours, the USD/JPY will certainly have the fuel to ignite a fundamental movement in either direction. If the Tokyo Core CPI and Japanese Retail Sales come in lower than expected while America’s data either meets or surpasses expectations, then we could see the currency pair dart towards the upside. On the other hand, signals of heavy economic contraction in the U.S. coupled with reasonable data from Japan would send the USD/JPY south in a hurry. Fundamentally, our 98.11 support turns resistance while we maintain our resistances of 99.00, 99.79 and 100.69. To the downside, we maintain our supports of 97.49, 96.65, and 95.92 with fresh bottom-end sitting at 95.08. The USD/JPY is currently exchanging at 97.78.



GBP/USD

The Cable’s rally ran out of gas at our 1.4781 resistance after surging on better than expected CPI and mortgage approvals data. It appears the GBP/USD may continue its near-term downward momentum towards our uptrend line and 1.4570 support with U.S. equities looking to open lower ahead of key economic data. Today Britain will give us a better picture of its consumer sentiment with CBI Realized Sales. Additionally, the U.S. will release a flood of data including Durable Goods Orders, New Home Sales, and weekly Crude Inventories. We knew reaching and surpassing February highs would be a challenge. The performance of the Cable over the rest of the week could determine whether the currency pair meets the challenge or stumbles back into its debilitating downtrend. Surpassing 2009 highs is all about upward momentum, and if the Cable doesn’t solidify and recover soon Tuesday’s high could quickly become the peak of the next leg down. The performance of the GBP/USD will now largely depend on the ability of U.S. equities to continue their ascent coupled with comparative inflation rates between the two economies. Fundamentally, we maintain our resistance of 1.4671 and find fresh resistances hanging at 1.4704, 1.4781, and 1.4809. The 1.45 area will serve as a psychological cushion with 1.50 acting as a highly psychological barrier. To the downside, we see supports of 1.4619, 1.4570, 1.4544 and 1.44498. The GBP/USD is currently exchanging at 1.4609.



EUR/USD

The EUR/USD continued its downward momentum yesterday, dropping below our previous 1st tier uptrend line. To assume the uptrend has been comprised would be an overreaction at this point. However, if the EUR/USD were to fall beneath 3/19 lows, we could see a large near-term drop before the currency pair finds new stability. The EUR/USD is fighting to keep its head above our medium-term downtrend line and is failing thus far, supporting the belief that we could see more near-term losses. Technicals aside, it’s intriguing the Euro depreciated against the Dollar yesterday considering most EU data came in slightly ahead of analyst expectations. Are we merely witnessing profit-taking from the EUR/USD’s amazing run, or the beginning of something more? Considering last week’s move was monumental and should have reflections for weeks to come, we’re sticking with the uptrend despite any losses we witness today. The EU has managed to avoid quantitative easing while keeping its benchmark interest rate at a respectable level, giving the Euro relative strength compared to the Dollar. Germany will release its Ifo Business Climate number today and analysts are expecting a slight decrease from the previous release to 82.2. Fundamentally, we find supports of 1.3427, 1.3371, 1.3317, and 1.3253. To the topside, we find resistances of 1.3494, 1.3554, 1.3624, 1.3688, and 1.3724. The EUR/USD has dropped below the 1.35 cushion, another indicator for more near-term losses.. The EUR/USD is currently exchanging at 1.3464.



Gold

Gold got shot down yesterday, extending early losses despite a late selloff in U.S. equities. Gold managed to regain some of its losses, but the damage has been done. While the uptrend isn’t busted, the precious metal is surely playing with fire. If gold can’t stay within a comfortable range of our new 1st tier uptrend line, the precious metal could collapse back into its downtrend and in effect negate its impressive gains from last week. That being said, last week’s run was monumental and backed by high volume. Therefore, one is led to believe gold can regain its composure and continue on its uptrend. We are looking towards equities for guidance assuming the negative correlation will come into play. Then again, these are not normal times, so we are not relying upon the correlation with as much conviction as we would have in the past. Fundamentally we see resistances of $927.78/oz, $931.98/oz, $935.34/oz, and $939.27/oz. To the downside, find supports of $924.69/oz, $919.65/oz, $916.85/oz, and $913.20/oz. The $900/oz. area should serve as a highly psychological cushion should gold’s decline reach this point. Gold is currently trading at $926.05/oz.

Published on  Wed, Mar 25 2009, 08:57 GMT