Dollar-Yen’s 5 year high five

It might be all about that buck but today I’d like to focus a bit more Mr. Japanese yen as Ms. USA leads him on the forex dance floor (yes, we are talking about the USD.JPY pair.) Ms. USA jumped high this morning before the quarterly Japanese Tankan survey, gave Mr. Japanese Yen a high five at a 5 year high level of 110, then moved back down.

The September survey showed that the recent depreciation of the yen supports the Tokyo stock market, but that higher costs are also hitting household spending. It also showed that sentiment among major manufacturers rose this quarter after the fast-paced USD/JPY hike, revealing that negative effects of weak exports and domestic demand were offset by the yen’s drop and strong Nikkei stocks.

So why did the pair pull back? It could be today’s data which showed drop in U.S. Treasury debt yields amid weakness in global stocks.

Investors also booked profits on long U.S. dollar positions ahead of key event risks – the European Central Bank’s monetary policy meeting on Thursday and Friday’s U.S. non-farm payrolls report.

Still, as we talked about it yesterday, many investors expect the dollar to sustain its strength for the rest of the year as they bet that robust U.S. economic data will lead the Federal Reserve to tighten monetary policy.

But we could see further temporary pullback before Ms. USA regains energy and shoots back up.

Intraday Forex Technical Levels

USD/JPY 4-hour: Rebounding after reaching high of 2008

Invest Diva Likes: Temporary Short positions below 110 with target at 109.17

If Pair Goes Nuts: Above 110 look for further upside towards x 110.52 and 111.68 in extension.

What’s up on the Forex Dance Floor: The pair has reached a new 5 year high and seems exhausted. With the RSI heading down towards the neutrality area, and the pair moving to the middle band of the Bollinger Bands, we could expect a temporary fall.

Supports and Resistances

111.68

110.52

110 Pivot point

109.17

108

EUR/USD 4-hour: Downtrend prevails.

Invest Diva Likes: Short positions below 1.2600 with targets at 1.2509 and 1.2385 in extension.

If Pair Goes Nuts: Above 1.2600 look for further upside towards 1.2717 and 1.2771.

What’s up on the Forex Dance Floor: The pair continues on an overall downtrend below the Ichimoku’s cloud and its support level.  The RSI is teasing the oversold zone.

Supports and Resistances

1.2771

1.2717

1.2600 Pivot Point

1.2509

1.2385

GBP/USD 4-hour: Rebounding.

Invest Diva Likes: Short positions below 1.6230 with targets at 1.6171 and 1.6069 in extension.

If Pair Goes Nuts: Above 1.6230 look for further upside towards 1.6280 and 1.6329.

What’s up on the Forex Dance Floor: The pair has moved down since it reached the level at 1.6490 but is now rebounding from the 76% Fibonacci level at 1.6168 below the Ichimoku’s cloud. The RSI is heading to the neutrality area.

Supports and Resistances

1.6329

1.6280

1.6230 Pivot Point

1.6171

1.6069

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