From a technical analysis and charting perspective, the US currency retains its position as the strongest within the G3 FX complex. Our Forex market analysis sees a strong USDJPY multi-month base and key supports being violated for EURUSD. Therefore, the USDJPY forecast is for a move still higher and our EURUSD forecast for a move to the downside.
As anticipated yet another push to the upside Wednesday through minor psychological resistance at 109.00, but more importantly through the 38.2% Fibonacci retracement of the entire 2015-2016 sell-off at 109.26. This price action reinforces the November push above a critical July high at 107.49, to signal a Quadruple Bottom structure, there has enhanced the intermediate-term bullish trend. Furthermore, this also leaves risk of further price gains into Thursday.
For Thursday/ Friday:
- We see an upside bias for 109.75 and then the psychological/option level at 110.00. Above here aims for 110.40.
- But below 108.77 opens risk down to 108.11, maybe 107.73/66, which we would look to try to hold.
Short/ Intermediate-term Outlook – Upside Risks:
- We see a positive tone with the bullish threat to 107.49 and 107.90.
- Above here targets 109.26, 110.00, 111.45 and 111.89.
What Changes This? Below 102.97 eases intermediate-term bull risks; through 101.15 signals a neutral tone, only shifting negative below 100.07.
Daily USDJPY Chart
Another push lower through key 1.0708 support on Wednesday, to reinforce the setback from the spike higher Tuesday and negative pressures from the Monday plunge through 1.0777, to leave risk for further losses into Thursday. For Thursday/ Friday::
- We see a downside bias through 1.0655; break here aims for 1.0605.
- But above 1.0730 targets 1.0770/80 and 1.0817.
Furthermore, the aggressive sell-off back through 1.0987, after the Wednesday US Presidential election result, signalled an intermediate-term shift back to a bearish theme. 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.
Daily EURUSD Chart