HIGHLIGHTS:

USDJPY: Further Downside Remains On The Cards - The pair continues to maintain its downside pressure closing slightly on a rejection candle on Monday and following through lower in today’s trading session.

EURUSD: Immediate Risk Remains Higher - With most of its recovery gains on Monday still maintained, immediate risk remains higher with focus on its Nov 16’09 high at …


USDJPY

USDJPY

USDJPY: Further Downside Remains On The Cards.

USDJPY – The pair continues to maintain its downside pressure closing slightly on a rejection candle on Monday and following through lower in today’s trading session. Now trading below the 88.82 level, immediate risk is now seen towards its Monday low at 88.57 with a loss of there allowing the pair to weaken further towards its Oct 07’09 low at 88.00 and then its Jan’09 low at 87.10. Its broader weakness and the fact that USDJPY remains trapped within its falling channel continue to support its present price action.
Alternatively, in order to reverse its present downside vulnerability, USDJPY must first recapture the 91.31 level, its Nov 04’09 high followed with the 92.27 level, its Oct 27’09 high. Beyond the latter will clear the way for a run at its Sept 07’09 high at 93.29. We retain our short term bearish view on this pair and see any recovery higher as corrective of that trend.


EURUSD

EURUSD

EURUSD: Immediate Risk Remains Higher

EURUSD – With most of its recovery gains on Monday still maintained, immediate risk remains higher with focus on its Nov 16’09 high at 1.5014. A sustained break and hold above there will set the stage for a run towards its YTD high at 1.5062 with an eventual break of that level creating scope for further upside towards the 1.5082 level, its Aug 10’08 high and next its 1.5283 level, its May 04’08 low. This view remains valid while EUR holdSfirmly above its long rising trendlineand its Nov 20’09 high at 1.4799. Its daily studies have turned higher supporting this view.
However, to reverse our bullish view, EUR must take out its LT rising trend and the 1.4799 levels thereby allowing further downside towards the 1.4625 level, its Nov 03’09 low and its Oct 02’09 low at 1.4479. We expect a combination of the first mentioned levels(1.4736 and 1.4625) to provide strong support if tested and turn the pair back up.