USD/JPY
Chart Levels:
Support 91.00..90.55..89.70..89.30.
Resistance 91.90..92.25..92.55..93.25.
The latest rally has stalled again against ‘channel’ resistance which happens to lie at the 200-day moving average at 92.25. Though well below the weekly Ichimoku ‘cloud’, slightly worrying is that the 9 and 26-week moving averages have crossed to a buy while all other elements of this chart suggest a short position. Note that the Lagging Span encounters resistance from the candles this week, so we feel prices should decline this week, down towards 89.00 with a break below 91.00 adding considerable downside pressure. The US dollar is currently overbought and momentum is neutral. Yen crosses are very mixed and are unlikely to give any direction here, the BRL having gained most this month.
EUR/USD
Chart Levels:
Support 1.3585..1.3532..1.3440..1.3250.
Resistance 1.3655..1.3790..1.3840..1.3965.
Dropping well below the bottom of the weekly Ichimoku ‘cloud’, close to 61% Fibonacci retracement support. The downward-sloping ‘wedge’ formation of the last three weeks, with three consecutive weekly downside tests, has culminated in a very large weekly ‘doji’. This hints that the end of the corrective move lower that started in December is in sight and we may have already found an important interim low. This week we favour a cautious squeeze to 1.3800/1.3840, the top of the weekly ‘cloud’ and this month’s weekly highs. A close around here Friday would form a ‘hammer’ on the monthly chart adding weight to our view. Note also that the upper edge of the ‘cloud’ rises very sharply in March, which should propell the Euro higher.
EUR/JPY
Chart Levels:
Support 123.30..122.30..121.50..120.70.
Resistance 125.25..126.00..127.00..127.55
Mixed signals from this weekly chart where the Ichimoku ‘cloud’ and moving averages suggest a short position, as does the potential inverted ‘flag’ formation. However, ‘channel’ support has limited the downside this month (just and not very well) and this cross is currently trading not that far from last year’s low, and probably a little too close for comfort for the authorities. Probably the best we can hope for these coming four to six weeks is a series of messy random moves around current levels so that we move sideways across the page until we meet the flat-bottomed weekly ‘cloud’. This should then push prices down and set off a drop to roughly the 118.00 area. Expect variations on this theme for other yen crosses.
GBP/JPY
Chart Levels:
Support 140.50..139.70..138.20..137.65.
Resistance 142.20..143.60..144.45..145.25.
Nothing to add as we hover slightly unsteadily on the 50% Fibonacci retracement support, lows that have limited the downside since October. All aspects of this chart suggest a short position but progress has been so slow for so long we fear many may have already given up the ghost. Later this year we still favour another move lower, most likely when the lower edge of the weekly Ichimoku ‘cloud’ drops sharply in early April. This should take the cross down to the 130.00 area. Sterling is no longer oversold against the yen, though it is against AUD and CAD, and bearish momentum is low. One-month at-the-money implied volatility should hold between 13.00% and 16.00% for some time yet.
GBP/USD
Chart Levels:
Support 1.5430..1.5400..1.5345..1.5260.
Resistance 1.5530..1.5700..1.5820..1.6000.
We continue to see the drop below 1.5700 as some sort of ‘extension’ and a chance to clear out stale longs, caused by the sudden thinning of what had been a massive weekly Ichimoku ‘cloud’. Cable is somewhat oversold and Friday’s daily ‘hammer’ suggests it is starting to try to turn around. Note that sterling is trailing badly as compared to the leaders which are the so-called ‘commodity’ currencies. The important thing is that many currencies are doing something similar. It backs up our view and we will watch for much stronger signs of reversal candles this week and this month. The very thin ‘cloud’ mid-March suggests a break above 1.6000 then. Open interest soared, on good volume, suggesting many have piled in recently.
EUR/GBP
Chart Levels:
Support 0.8750..0.8650..0.8600..0.8525.
Resistance 0.8829..0.8840..0.8900..0.9008.
Little to add as we trade in a relatively narrow band either side of a terribly thin weekly Ichimoku ‘cloud’. While we continue to feel this pair will hold above 0.8650 for another month, we shall be quick to pencil in a re-test of pivotal support at 0.8400 if necessary. This could happen sooner rather than later because the 9-week moving average lying at 0.8829 has dropped to cap recent rallies. The Euro is no longer oversold against sterling and momentum is only just bearish. One-month at-the-money implied volatility has eased off a again as we hold current price levels, and might drop back to its long term average at 7.65%. Note that this month sterling has lost ground against every single major currency; overdone perhaps?
