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USDJPY and EURUSD Erratic Consolidation

Technical Analysis

Erratic, indecisive consolidation has become the dominant theme for the US$ within G3 (that is USD, EUR and JPY).

We look for EURUSD and USDJPY to continue within short-term ranges into this week, with the skewed bias for both to break to the downside on a “risk off” type move.

USDJPY

An extremely erratic tone last week and highlighted by the Friday price action, after a stall again back from 120.35/44 area to push through 119.21/20 support, to rebound from 118.57 support, but still to leave risk lower Monday.

Moreover, the latter August aggressive sell off through multiple 2015 supports (118.86, 118.14, 116.67) and setback from 121.75/77 resistance, still leaves an underlying bear tone into early October.

Short/ Intermediate-term Outlook – Downside Risks:

  • We see a more negative tone with the bearish threat to back down to the 118.43/118.21/117.83 area and 116.14 spike low.
  • Below here targets 115.57 and 113.86.

What Changes This? Above 121.75/77 signals a neutral tone, only shifting positive above 124.16.

Daily USDJPY Chart

USDJPY

EURUSD

Further erratic consolidation activity Friday and for early October, to leave our short/ intermediate-term outlook as a range theme early this month.

The Friday head fake upside breakout appears a bullish failure to leave a negative bias fro Monday.

Short/ Intermediate-term Range Parameters: We see the range defined by 1.1085 and 1.1460.

Range Breakout Challenge

  • Upside: Above 1.1460 aims higher for 1.1714 and 1.1871.
  • Downside: Below 1.1085 sees risk lower for 1.1015 and 1.0846/07.

Daily EURUSD Chart

EURUSD

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.


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