Today’s Forex Guide

What’s next for Japan?


Sep.26.2014

The dollar- yen pair impressed us last month with rapid hikes towards 6-year high levels. But can this keep on going?

The US GDP final price index was out this morning as expected, and showed that the US economy grew at a 4.6% annual pace in the second quarter. On the mostly light economic data for today, forex traders took que from the news and the US dollar got a bit stronger, so we saw gains in USD/JPY and drops in EUR/USD.

Whats-next-weaker-japanese-yen

The Japanese yen was further influenced by the latest Japanese inflation numbers last night as well because both the Tokyo and national core CPI readings came in worse than anticipated yesterday. This may have been seasonal though because the report suggested that costs of air conditioners and summer clothing may have been responsible for this.

Now the inflationary pressure is on Mr. Kuroda and Bank of Japan because the temporary effects of the sales tax hike is expected to keep fading in the coming months. So what's Japan to do next? Another tax hike? Or quantitative easing? Both of these options are being argued by the analysts, one of them said to be nonviable.

Another tax hike might further weigh on Japan's already sickly economy.

A quantitative easing could be the key as former BoJ official Masaaki Shirakawa estimated that price levels will continue to fall. BoJ might need to lay down its easing plans as early as October! But they would have to convince Mr. Kuroda to drop his optimistic views and admit that the Japanese economy is weak.

It's Friday and the already tired markets are moving even slower on light economic data. Next week should be a fun one though with a bunch of key economic data coming out for the beginning of October.

 

Intraday Forex Technical Levels


USD/JPY 4-hour Forex Dance Floor
USD/JPY 4-hour: Consolidating.

Invest Diva Likes: Long positions above 109.17 with targets at 110 and 110.52 in extension.

If Pair Goes Nuts: Below 108.59 look for further downside towards 108 and 107.31.

What's up on the Forex Dance Floor: The pair is on an overall uptrend above the Ichimoku's cloud but currently is consolidating between the levels at 108.59 or the Ichimoku's cloud and 109.17. The pair is now teasing the resistance level with the RSI above the neutrality area.

Supports and Resistances
110.52

110

109.17 Pivot point

108.59

108

107.31


GBP/USD 4-hour Forex Dance Floor
GBP/USD 4-hour: Consolidating.

Invest Diva Likes: Short positions below 1.279 with targets at 1.171 and 1.6060 in extension.

If Pair Goes Nuts: Above 1.6323 look for further upside towards 1.6398 and 1.6485.

What's up on the Forex Dance Floor: The pair is consolidating around the 23% Fibonacci level at 1.6323 within the Ichimoku's cloud. The RSI is heading down, slightly below the neutrality area.?

Supports and Resistances
1.6485

1.6398

1.6323 Pivot Point

1.6279

1.6171


AUD/USD 4-hour Forex Dance Floor
AUD/USD 4-hour: Downtrend prevails.

Invest Diva Likes: Short positions below 0.8797 with targets at 0.8743 and 0.8659 in extension.

If Pair Goes Nuts: Above 0.8839 look for further upside towards 0.8891 and 0.8937.

What's up on the Forex Dance Floor: The pair is on an overall downtrend below the Ichimoku's cloud with the RSI below the neutrality area. One of the largest international brokers says that 70% of traders are long the pair. Using this market sentiment index as a contrarian signal, the combination of the technicals and current sentiment gives a further bearish bias.

Supports and Resistances
0.8937

0.8891

0.8839 Pivot Point

0.8797

0.8743

0.8659

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