USD/JPY Forecast: September high resistance could become a new support

Dollar-Yen pair recovered from the low of 103.72 to print a session high of 104.32 on Monday before ending the day around 104.18 levels. The offered tone around JPY remains strong in Asia, given the pair has breached high of 104.32 levels. The question is whether the pair would be able to close above 104.32 levels today.

The data calendar is light with just US consumer confidence due for release. The index is seen retreating slightly to 101.00 in October from September’s figure of 104.1. Meanwhile, house price index and Richmond Fed Manufacturing index could be ignored unless the actual print misses estimated by a wide margin.

Federal Reserve Bank of St. Louis President James Bullard said Monday very low rates are likely to persist well into the future. Bullard belives the central bank only needs to raise rates one more time following which it can stand pat for a prolonged period of time. Bullard’s comments have not had any noteable impact on Fed Decembe rate hike probability, which remains well above 70%.

Technicals – Stuck between monthly and weekly pivot

Daily chart

• Pair’s rebound from 103.72 (monthly classic pivot R1) has ran into resistance at 104.42, which is weekly classic pivot resistance.
• The weekly MACD shows a bullish crossover suggesting the pair may have bottomed out around 100.00 and the momentum remains in favor of the bulls. However, the daily MACD shows the bullish momentum has run out of steam.
• Hence, fresh dollar demand is anticipated only after the confirmation of a bullish break i.e. a daily close above 104.32 (September highs). Note that we have had multiple intraday highs above 104.32 earlier this momth, but the daily close has been below 104.32.
• A daily close/4-hour close above 104.32 would open doors for 105.00-106.00 levels.
• On the lower side, failure to hold above 104.32 followed by a break below 103.72 would signal end of the corrective rally from 100.00 levels.

AUD/USD Forecast – Candles with long tails suggest scope for correction

Daily chart

• Despite Thursday’s bearish outside day candle, the subsequent weak follow through and repeated failure to hold below 0.76 handle suggests the pair coul revisit area around 0.7650 levels.
• On a slightly larger scheme of things, bearish invalidation is seen only above Thursday’s high of 0.7734 levels.
• On the lower side, only a 4-hr close below 0.7587 would signal otninuation of retreat from Thursday’s high of 0.7734. The rising trend line support seen around 0.7515 levels could be put to test in this case.

NZD/USD Forecast – Descending trend line offering support

Daily chart

• Despite the pair’s retreat from the high of 0.8266 levels (Oct 20 high), the rebound from the descending trend line (drawn from Sep 8 high and Seo 22 high) seen on Monday and in the Asian session today suggests the bearish momentum may have run out of steam and thus the spot could see a minor corrective move to 0.7138 (monthly classic pivot S1).
• On the lower side, breach of 0.71 handle on the 4-hr chart would open doors for a sell-off to 0.7035 (Oct 13 low).