Forex Analysis: USD/JPY, EUR/USD, GBP/USD

USD/JPY outlook: Bulls look for a break of new 24-year high

(Slobodan Drvenica – Windsor Brokers)

The USDJPY is trading just ticks ahead of new 24-year high (145.90, posted on Sep 22) in European session on Tuesday.

Bulls regained traction after a quick pullback from 145.90 peak found firm ground just above psychological 140.00 support and nearly fully retraced 145.90/140.34 dip, setting scope for a break higher that would signal a continuation of larger uptrend and bring in focus key long-term barrier at 147.68 (1998 high).

Bullish technical studies support the action, however, bulls may face headwinds at 145.90 pivot and slow the pace, as daily stochastic is strongly overbought and bullish momentum is easing.

Shallow dips should be contained by rising 10DMA (144.84) to keep bulls intact, while break lower would weaken immediate bullish structure and signal prolonged consolidation.

Trendline support at 144.12 (bull-trendline off Aug 2 through at 130.39) marks pivotal support.

Res: 145.90; 146.90; 147.21; 147.68.
Sup: 145.23; 144.84; 144.12; 143.52.

Buying two units EUR/USD at 0.9698

(Ian Coleman M.S.T.A. – Educate2accumulate)

Stop loss 0.9655.

Target 1 (Bat formation) 1.0274 – Return Ratio 13.4.

Target 2 (261.85 and TL level) 1.0715 – Return Ratio 23.65.

Not a normal spot currency play and we will be reliant on the US inflation figures on Thursday (CPI).

USD Basket (overlay chart NOT DXY). Inside pattern completing (Crab) within a large, calculated BAT formation. With a stop above the swing high, this offers substantial risk against reward setup

EUR/USD: one set up. Two targets

GBP/USD Forecast: Pound stays resilient as BOE remains active

(Eren Sengezer – FXStreet)

– GBP/USD continues to fluctuate above 1.1000 for the second straight day.

– BOE announced that it intends to purchase index-linked gilts.

– The pair’s recovery gains are likely to remain limited amid risk aversion.

GBP/USD has managed to climb into positive territory above 1.1050 during the European trading hours on Tuesday after having tested 1.1000 earlier in the session. The near-term technical outlook shows that the pair could extend its rebound if it manages to clear the 1.1140 resistance. The risk-averse market environment, however, could make it difficult for the pair to gather bullish momentum.

Earlier in the day, the Bank of England (BoE) announced that it intends to purchase index-linked gilts and reiterated that it stands ready to purchase up to 10 billion sterling of gilts each day until the end of the week. Following this announcement, the 10-year UK bond yield, which gained more than 4% on Monday, edged lower and turned negative on the day near 4.4%. Hence, improving market conditions seems to be helping the British pound hold its ground for the time being.

Meanwhile, the data published by the UK’s Office for National Statistics revealed that the ILO Unemployment Rate declined to 3.5% in three months to August from 3.6%. On a negative note, the Claimant Count Change rose to 25.5K in September, coming in much worse than the market expectation for a decrease of 11.4K.

In the second half of the day, the US economic docket will not be featuring any high-impact data releases. As long as UK gilt yields continue to push lower, US bond yields are likely to stay under pressure as well. The benchmark 10-year US T-bond yield was last seen posting small daily losses at 3.9%. In case global bond markets remain steady, GBP/USD could keep its footing.

Nevertheless, the UK’s FTSE 100 Index is down more than 1% on the day and US stock index futures are losing between 0.7% and 0.8%. Unless risk flows return to markets during American trading hours, the dollar should preserve its strength and cap GBP/USD’s upside.

GBP/USD Technical Analysis

In order to attract buyers, GBP/USD needs to rise above 1.1100 (psychological level, 20-period SMA on the four-hour chart) and 1.1140 (Fibonacci 38.2% retracement level of the latest uptrend, 100-period SMA). A four-hour close above the latter could open the door for another leg higher toward 1.1200 (psychological level, 50-period SMA). Ideally, the Relative Strength Index (RSI) indicator on the same chart would rise above 50 in that scenario to confirm the bullish tilt in the near-term technical outlook.

On the downside, 1.1030 (Fibonacci 50% retracement of the latest uptrend) aligns as interim support before 1.1000 (psychological level) and 1.0920 (Fibonacci 61.8% retracement).

Read XAUUSD outlook: Gold extends steep downtrend as dollar firms

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