The Currency Charts That Matter

Yuan - end of therecent strength 

The test of the 61.8%retracement from the up move into the end of last year has been a longtime coming, the level held and has seen a two day bounce. Any longs at the Fibretracement should have stops placed below 6.4591 and be targeting a move back,firstly, to 50% then swing high at 6.5585 and 38.2% at 6.584. The PBOC arerumoured to be working on a currency trading tax to prevent speculation whichis alleged to be the cause of the spikes labelled. If it comes in to force thenvolumes are likely to fall, however the impact of speculation I feel will belimited.

Yen strong afterBoJ 

Yesterday morning the BoJstuck to their sources comments and did not cut rates further into negativeterritory, keeping them at -0.1% and QQE at 80tr per annum. Furthermore theyremoved wording on 'cutting rates further into negative territory' this hawkishrhetoric has strengthened Yen across the board even against the strong Eurotaking it back below key 126.04 level, a close below 125.59 signals a movetowards 121.93 lows and likely further as the market has finally moved awayfrom the downtrend. More BoJ talk this morning has taken some of thehawkishness away so now is a question of whether 126.04 holds for strength toremain.

Dollar index - FOMCknow your levels 

The FOMC is now expected toleave rates on hold so focus is going to be on tone (which is expected to bemore hawkish than January) and also the SEPs and Dots tonight barring anysurprise move. The Dollar has weakened since ECB action last week but hasconsolidated and bounced to 38.2% Fib level, whilst this holds a continuationlower through uptrend/flag to 95.98 low watch out for 96.49 and 96.34-32 on theway down. An extra hawkish Fed will instigate a move to 61.8% retracement at97.54 and small highs 97.63-70 before a full retracement to 98.5 ECB high.