Thu, Mar 13 2008, 07:16 GMT
by ActionForex.com Team
Action Insight Daily Report
EUR/USD at New Record High, USD/JPY Pressing 100
The dollar's weakness resumes again and sinks to record low against Euro and Swissy. On the other hand, strength in the Japanese is even more apparent with USD/JPY making new 12 year low and is now pressing 100 psychological level. Yen's strength is also felt strongly across the board with yen crosses remaining heavy.
A couple of factors are contributing to the movements. Firstly, obviously markets are concerned that Fed's TSLF won't have any long term effect in solving the dry up of the money markets. Secondly both the greenback and Asia stock markets are hit by the news that Amsterdam listed Carlyle Group hedge fund failed to reorganize debt and defaulted on about $16.6b of debt through Mar 12. Thirdly, there are continuous speculation of dollar depeg. Central Bank of Jordan Sharaf said yesterday that the bank is reducing the amount of dollar in its foreign reserves because of declining value of the dollar. UAE economy mister Bin Saeed Al Mansouri also complained that the dollar peg is "contributing" to record inflation.
Technically speaking, after brief consolidation, dollar's downtrend has obviously resumed and more weakness is expected to be seen across the board. In particular, note the strength in yen. While USD/JPY and GBP/JPY are leading the way in resuming the down trend, other yen crosses are set to retest recent lows.
Feb retail sales report from US is the main feature today which is expected to show 0.3% growth in headline sales and 0.2% growth in ex-auto sales. Yen crosses will be particularly sensitive to the data together with reactions in the equity markets. Also, SNB is expected to keep rates unchanged at 2.75%.
More Technical Analysis Reports Here
USD/JPY Daily Outlook
Daily Pivots: (S1) 101.12; (P) 102.32; (R1) 103.00; More.
USD/JPY's fall resumes and accelerates after taking out prior low of 101.41, diving to as low as 100.01, pressing the important 100 psychological support. At this point, intraday bias remains on the downside as long as 101.07 minor resistance holds. Sustained trading below 100.00 level will encourage further fall to short term target of 100% projection of 114.77 to 104.96 from 108.59 at 98.78 first. Meanwhile, above 101.07 will indicate at least an intraday low is in place and turn outlook neutral first.
In the bigger picture, USD/JPY is finally testing the 100 psychological level. At this moment, there is no clear sign of reversal yet. At least, the fall from 108.59 is still in force as long as 103.59 resistance holds even in case of a strong rebound. As discussed before, sustained break of 100 psychological support will indicate firstly that underlying downside momentum in USD/JPY is still strong. Also, this will indicate USD/JPY has already broken out of multi year consolidation pattern that started in 98 at 147.68 and set the stage for the medium down trend to extend further to next target of 90 psychological support.
However, strong break of 103.59 resistance will argue that fall from 108.59 has completed and will be the first alert that USD/JPY is at least supported by 100 psychological level in short term. Outlook will be turned neutral in such case and stronger rally should then be seen to retest 108.59 resistance.
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