Mid−Day Forex Technical Report − Dollar Mixed, Yen Weakens after US Q4 GDP

Thu, Mar 27 2008, 13:13 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Mid-Day Report

Dollar Mixed, Yen Weakens after US Q4 GDP

Final print of Q4 GDP growth in US was left unchanged at 0.6%. Though the core CPE growth was revised down from 2.7% qoq to 2.5% qoq. Personal consumption, on the other hand, was revised up from 1.9% to 2.3%. Jobless claims improved slightly from revised 375k to 366k. After all, the dollar lacks a clear cut direction so far. Though, the Japanese yen weakens broadly on anticipation for a higher open in the US stock markets. The Euro, on the other hand, continues to consolidate yesterday's sharp gain against dollar.

The more noticeable movement of today is Sterling's strength which is seen broadly. The pound was lifted in European session after the release of CB distributive trade which unexpectedly improved from -3 to +1 versus expectation of worsening to -5. Released earlier, German Gfk consumer confidence unexpectedly improved from 4.5 to 4.6 in Apr. EUR/GBP fails again before record high of 0.7911 and retreats sharply.

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USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 98.60; (P) 99.46; (R1) 100.04; More.

USD/JPY's fall from 101.03 was contained at 98.55 and recovers mildly in early US session. Nevertheless, intraday bias remains mildly on the downside as long as 100.32 minor resistance holds. 4 hours MACD's stay below signal line is still supporting the argument that rebound from 95.77 has possibly completed at 101.03 already. Further break of 97.65 support will confirm this case and bring retest of 95.77 low. However, above 100.32 will indicate that fall from 101.03 has completed and will turn intraday outlook neutral first.

In the bigger picture, as discussed before, USD/JPY has just broken out of multi-year triangle consolidation pattern that started in 98 at 147.68. The decline from 124.13 has met 76.4% retracement of 79.75 to 147.68 at 95.78 so far. Some support is seen at this level. But still, there is no sign of reversal yet.
Also, the structure of the current fall from 124.13 argues that USD/JPY is just in the middle of a larger down trend only.

Medium term outlook remains bearish as long as 103.59 cluster resistance (61.8% retracement of 108.59 to 95.77 at 103.69) holds. Sustained trading below 95.78 will encourage further fall to next important psychological level at 90 first. However, firm break of 103.59 cluster resistance will argue that a medium term bottom is already in place. In such case, stronger medium term rebound should be seen to correct the whole fall from 124.13.