HIGHLIGHTS:

USDJPY: Holds On To Recovery Gains - The pair has immediate risk to the upside as it continues to hold on to its recovery gains triggered off the 89.12 level, its Jan 27’10 low. …

EURUSD: Struggles To Establish Higher Recovery - While we retain our broader bearish in the short term on the pair, risk of a recovery higher arising........


USDJPY

USDJPY

USDJPY: Holds On To Recovery Gains

USDJPY – The pair has immediate risk to the upside as it continues to hold on to its recovery gains triggered off the 89.12 level, its Jan 27’10 low. The challenge is for the pair to recapture its minor resistance at the 90.91 level followed with its Jan 21’10 high located at 91.86 where a break will bring the 92.62 level, its channel top into focus. A halt in price is expected to turn the pair lower. Its daily RSI has turned higher supporting this view. To the downside, a trade below the 89.12 level is required to resume its declines started off its 2010 high at 93.74 towards the 88.30 level, its Dec 14’09. Below there will put USDJPY on the path to further declines towards its Dec 09’09 level at 87.35 with a decisive violation of there clearing the way for a run at the 85.85 level, its Nov 30’09 high and ultimately the 84.80 level, its 2009 low. This view remains valid while the pair trades and maintains within its defined falling channel level, its Nov 25’09 high and possibly higher.


EURUSD

EURUSD

EURUSD: Struggles To Establish Higher Recovery

EURUSD – While we retain our broader bearish in the short term on the pair, risk of a recovery higher arising from its recent sell off could be shaping up. After testing a low of 1.3851 during intraday trading on Monday, the pair reversed higher to close the session at 1.3921.Unless the mentioned intraday low is broken, immediate risk is upside to consolidation.
Resistance comes in at its Jan 21’10 low at 1.4028 with a turn above there exposing the 1.4194 level, its Jan 25’10 high. We expect a combination of these levels to reverse roles and provide resistance thereby turning the pair lower again. Further out, stronger resistance lies at the 1.4216/62 levels, its Dec 22’09 low/Jan 08’10. On the downside, if the 1.3851 level is invalidated, downside pressure will develop towards its July 08’09 low at 1.3831 with a break targeting the 1.3747 level, its Jun 16’09 low or even lower.