USD Technical News

USDCHF remains in uptrend from 0.9917. As long as 1.0218 support holds, we’d expected uptrend to continue and further rally to test 1.0338 key resistance is still possible later today, a break above this level could indicate that the downtrend from 1.1021 (June 24 high) has completed at 0.9917 already. However, next short term cycle top is nearing, consolidation would more likely be seen before breaking above this level.

EUR Technical News

The Euro surpassed the resistance 1.4734 without being able to advance, but at the same time, it did not break or approach the support 1.4649. It seems that the fluctuation we have seen has started building a small triangle pattern, with its limits at 1.4734 & 1.4681, and breaking any of these limits is what will set the direction for the short-term. If we break support at 1.4681 we will target Fibonacci 38.2% (for the rise from 1.3747) which is now closer than ever at 1.4610, and then the support area 1.4510/1.4518 that includes several daily bottoms. Short-term resistance is at the supposed triangle pattern limit 1.4734, breaking it would mean that the Euro will have a chance to catch a breath after this big drop. Breaking this resistance will target at least 1.4847, and may be 1.4903 as well.

GBP Technical News

The Pound broke the resistance 1.6207 and successfully reached both suggested targets 1.6325 & 1.6365. Yesterday’s bottom came close to the all important Fibonacci 61.8% for the whole move from 1.5705 to 1.6875, which is at 1.6152, this is without a doubt the most important support for the rest of the week. Maintaining above this very important support would mean that the Pound will have a chance to create a correction that could surprise many with its size. We have seen a good part of that correction by reaching 1.6373 yesterday. As for the short-term, support is at 1.6235, and break here would result in another attempt to test 1.6152, and if this important level is broken, the Pound will be hit hard, targeting 1.6045 at the very least. Short-term resistance is 1.6289, and breaking it would mean that the odds favor a continuation of this advance to areas above yesterday’s high, targeting 1.6390 first, then 1.6440.

JPY Technical News

USD/JPY Weakens in Reaction to Disappointing GDP Data

Yesterday, the DPJ announced the implementation of a $81 billion stimulus package to help buoy a beleagured Japanese economy. Although the DPJ’s new stimulus package should give a positive boost to the nation’s economy, analysts are already debating whether the $81 billion is enough to turn deflationary pressures. The Yen initially strengthened in reaction the DPJ’s announcement, highlighting investor skepticism in regards to the effectiveness of the stimulus package in regards to tempering deflation. In addition to the DPJ’s announcement, Japan reported that its Trade Balance widened more than expected, suggesting global demand for Japanese exports continues to recover.