The US dollar has retained its extremely bullish tone since the US Presidential election result, particularly robust versus both the Japanese Yen and the Euro.
Our USDJPY FX forecast remains for still further higher activity, with a strong follow-through to the upside already this week, continue to challenge longer term resistance levels. We still see the risk considerably higher into year-end and likely for early next year.
For EURUSD, although a new cycle low had not been posted this week, the probe last week below 1.0520, the December 2015 critical swing low reinforces bigger picture bearish risks into the end of 2016 and on into Q1 2017
An extremely strong rally on Wednesday up through the recent peak at 113.90 and hit a next target at 114.44, to completely reject the small Head and Shoulders pattern that formed through letter November, to maintain upside risk again into Thursday.
Furthermore, we still see intermediate-term upside pressures intact from the recent push above the 50% retracement of the entire 2015-16 sell-off at 112.42.
- We see an upside bias for 114.44; break here aims for 114.88 and maybe above towards 115.59.
- But only all the way back down through 113.34 opens risk down to 112.83.
Short/ Intermediate-term Outlook – Upside Risks:
- We see a positive tone with the bullish threat to 114.88.
- Above here targets 115.59, 117.53 maybe as high as 120.00/10.
What Changes This? Below 108.51 signals a neutral tone, only shifting negative below 105.99.
Daily USDJPY Chart
A push lower as expected Wednesday, to probe below 1.9563 support, after a failed rebound effort again Tuesday, back from resistance at 1.0685, and given the probe last Thursday just below the key 1.0520 low from December 2015, we see the risk lower again Thursday.
Furthermore, the probe of 1.0520 reinforces the aggressive sell-off through 1.0987 after the US Presidential election result, enhancing the intermediate-term bearish theme.
- We see a downside bias for 1.0553/50 and maybe back to 1.0517, then 1.0500 (maybe this week to critical 1.0459, the 2015 multi-year low).
- However, a push above 1.0685 aims for 1.0745 and maybe 1.0770/80.
Short/ Intermediate-term Outlook – Downside Risks:
- We see a negative tone with the bearish threat to 1.0520 and maybe parity (1.0000).
What Changes This? Above 1.1300 signals a neutral tone, only shifting positive above 1.1366.
Weekly EURUSD Chart