JPY Recovery after a long bearish week.
Economical News
USD
During the Asian session, the USD continued climbing higher against all major counterparts. The USD thus gained back most of the losses it suffered following the Federal Reserve rate decision on Wednesday. The policy statement that accompanied the Federal Open Market Committee's rate decision appeared to shift its stance to neutral from a previously bullish bias towards tightening. Consequently, a massive USD sell-off sent the EURUSD to test the 1.34 level, a level the pair has not seen for precisely 2 years, since March 21st,2005. Yesterday, however, the dollar managed to recoup its losses despite a weaker than expected Leading Economic Indicators Index reading of -0.5%. Expectations were for a -0.3% reading, and adding to the pessimism the Index reflected, was the 0.4% downward revision to January's figure.
Existing Home Sales data is due out today and forecasts are for a 6.34mln reading, lower than the 6.46mln previous reading. Despite being the only data on tap, the release might generate significant price action, mainly due to the scrutiny the housing sector is subject to lately. The risks are for a downside surprise which might generate a second attempt at the 1.34 and 1.97 vs. the EUR and GBP, respectively.
EUR
Euro Zone's Industrial New Orders dropped 0.2% MoM, beating expectations for a 1.0% decline. In spite of the upside surprise in New Orders, traders paid closer attention to comments issued by the European Council which warned the European Central Bank from overshooting. The council stated that “The ongoing tightening of monetary policy could lead to a sharper than expected slowdown of investment growth”. The EUR was weaker against most of its counterparts following the EC comments, and gained only against the weak JPY.
The most significant data scheduled for release today is the Euro-Zone Current Account for January. It will require strong income flows and unilateral transfers in order to offset yesterday's dismal -7.8bln Trade Deficit, but it seems the EUR is already pricing in a negative figure - which might actually bring the EUR to rebound even on the back of a slightly better than expected release.
JPY
The JPY experienced a relatively calm overnight session on the back of an inline with expectations All Industries Activity Index. The index released at 0.7 after printing flat the previous month, and the current reading should provide some support for the JPY as the index stands in high correlation with the Tankan tertiary index, a known market mover.
With the Japanese traders already off their desks for the weekend, the JPY trade is expected to remain calm - and might even regain some of the recent losses.
Technical Analysis
EUR/USD
This pair breached the key resistance level at 1.3370 and tipped the yearly high at 1.3400, technical indicators support a continuation of the bearish reversal back to 1.3250 price levels.
GBP/USD
The 4 hours slow stochastic is crossing below 20, building strength to try and test the resistance at 1.9725 once more, however a failure to gain momentum for a new high will drive this pair backwards to the first retracement.
USD/JPY
This pair is trying to break the 118.25 resistance level for the 2nd time in the last 14 days creating a shape of a double top. volatility has dropped and indicators show that a bearish trend is forming.
USD/CHF
A slight rebound for the USD yesterday has failed to last, with momentum at 100.5 and RSI at 60 and facing downwards we will see the range of 1.2200 to 1.2080 hold still.
Wild Card
GBPJPY
This forex pair has reached the heavy resistance level at 232.30 and failed to break upwards, it also reached the upper Bollinger band on the daily chart. The major long term trend is still down even though last week came with a rather bullish correction, we are expected to see bearish behavior today.
Market Trend
| EUR/USD | GBP/USD | USD/JPY | USD/CHF | AUD/USD | EUR/GBP | |
|---|---|---|---|---|---|---|
| Daily Trend |  |
|
|
 |
 |
|
| Weekly Trend | |
|
|
|
|
|
| Resistance | 1.3525 | 1.9900 | 120.58 | 1.2255 | 0.8212 | 0.6888 |
| 1.3475 | 1.9830 | 119.52 | 1.2213 | 0.8157 | 0.6869 | |
| 1.3405 | 1.9705 | 118.55 | 1.2160 | 0.8095 | 0.6836 | |
| Support | 1.3285 | 1.9546 | 117.15 | 1.2040 | 0.7981 | 0.6754 |
| 1.3225 | 1.9421 | 116.44 | 1.1975 | 0.7949 | 0.6727 | |
| 1.3112 | 1.9307 | 115.80 | 1.1841 | 0.7813 | 0.6694 |
Indicators
| Date | Time GMT | $€£¥ | Event | Period | Prev. | Forecast | Imp |
|---|---|---|---|---|---|---|---|
| 23/03/2007 | 9:00 | EUR | Current Account | (JAN) | 2.3B | N\A |  |
| 23/03/2007 | 14:00 | USD | Existing Home Sales | (JAN) | 6.46M | 6.34M |  |
| 23/03/2007 | 15:30 | USD | New York Fed President Geithner Speaks | |