Central banks have added considerable volatility to the Forex market recently. Last week, US made its first hike in nearly one decade—a reflection of the superior US economic growth. We are now entering a bit of post-decision lull period, and so far markets seems to take it pretty well. As a whole, the market sentiment has been improving, which has provided some support to the EM forex. However, countries with significant current account deficits, external borrowings and high levels of foreign ownership might suffer from the tightening of USD liquidity in 2016.
Last Friday BOJ decided to reinforce open-ended character of QQE without further quantitative easing. It is not additional easing, but the decision was aimed at making it easier to continue QQE. There was no change to BOJ commitment to meet 2% price target. The market reactions reflects confusion and concerns about the BOJ’s communication, which many put pressure on USD/JPY in a short term when the post-Feb gains are being erased.
Barclays gives its trade recommendation as short GBP/USD and long USD/CNH: “Slowing UK growth momentum should be confirmed in next week’s final read of Q3 GDP, supporting our bearish sterling view in the context of impending fiscal tightening and EU referendum risk (see FX Forecast Update: Marking to events, 11 December 2015). Our technical strategist would be encouraged by a break in GBPUSD below nearby targets in the 1.4855 area. Greater technical targets are towards 1.4565, the year-to-date lows.”
Currency Updates:
EUR/USD
Pivot: 1.11
Our preference: short positions below 1.11 with targets @ 1.045 & 1.019 in extension.
Alternative scenario: above 1.11 look for further upside with 1.1495 & 1.173 as targets.
Comment: as long as 1.11 is resistance, likely decline to 1.045. The pair stands below its strong resistance @ 1.11.
Supports and resistances:
1.173 ***
1.1495 ***
1.11 ***
1.0873 Last
1.045 ***
1.019 ***
0.985 **
USD/JPY
Pivot: 119.8
Our preference: long positions above 119.8 with targets @ 123.8 & 126 in extension.
Alternative scenario: below 119.8 look for further downside with 118 & 116 as targets.
Comment: a support base at 119.8 has formed and has allowed for a temporary stabilisation.
Supports and resistances:
127.7 **
126 ***
123.8 ***
121.22 Last
119.8 ***
118 ***
116 ***
GBP/USD
Pivot: 1.566
Our preference: short positions below 1.566 with targets @ 1.485 & 1.456 in extension.
Alternative scenario: above 1.566 look for further upside with 1.594 & 1.619 as targets.
Comment: a break below 1.485 would trigger a drop towards 1.456.
Supports and resistances:
1.619 **
1.594 ***
1.566 ***
1.4909 Last
1.485 ***
1.456 **
1.423 ***
AUD/USD
Pivot: 0.753
Our preference: short positions below 0.753 with targets @ 0.69 & 0.665 in extension.
Alternative scenario: above 0.753 look for further upside with 0.7805 & 0.8165 as targets.
Comment: as long as 0.753 is resistance, look for choppy price action with a bearish bias.
Supports and resistances:
0.8165 ***
0.7805 ***
0.753 ***
0.7175 Last
0.69 ***
0.665 **
0.635 ***
SPI200(ASX)
Pivot: 5010
Our preference: long positions above 5010 with targets @ 5095 & 5130 in extension.
Alternative scenario: below 5010 look for further downside with 4960 & 4920 as targets.
Comment: the RSI lacks downward momentum.
Supports and resistances:
5160
5130
5095
5044 Last
5010
4960
4920
Important note: These technical and research reports are provided to easy-forex® as a subscriber of third party providers. They are provided for informative purposes only and in no way can they be considered as a recommendation by easy-forex® to you to engage in any trade. Hence, easy-forex® shall not be held responsible for any outcome of trading decisions, in regards with these reports or similar reports. You hereby acknowledge that using the information entailed in these reports is at your sole responsibility and you will have no claims with regards to these reports against easy-forex®. If you do not agree to this, you are strongly advised not to use these reports.
Easy Forex Pty Ltd (AFSL 246566 ABN 73107184510) makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Easy-Forex recommends that you read the Regulation Page, The Product Disclosure Statement, the Terms and Conditions and the Financial Services Guide before making any decision concerning Easy-Forex’s products.