Price & Time: Monthly Close Important For EUR/USD

Talking Points

• USD/JPY stalls near minor retracement level
• AUD/USD rebounds from 4-year low
• Long-term negative implications if the euro closes the year under 1.2135?

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: USD/JPY

Charts Created using Marketscope – Prepared by Kristian Kerr

• USD/JPY tested the 120.50 78.6% retracement of the early December decline last week
• Our near-term trend bias is higher in USD/JPY while above 119.40
• A close over 120.50 is needed to re-instill upside momentum and set the stage for a test of 122.00
• The next important turn window for the pair is eyed around the latter part of next week
• A close under 119.40 would turn us negative on the exchange rate

USD/JPY Strategy: Like the long side while over 119.40.

Price & Time Analysis: AUD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• AUD/USD fell to a new four year low last week before finding support just ahead of .8100
• Our near-term trend bias is negative while below .8200
• A close under .8070 is needed to confim a resumption of the broader decline
• A turn window is seen around the start of the month
• A close over .8200 would turn us positve on the Aussie

AUD/USD Strategy: Like the short side while below .8200.

Focus Chart of the Day: EUR/USD

EUR/USD is inching closer to a key support/pivot in the 1.2135 area. This level marks the 50% retracement of the all-time low recorded in September 2000 and the all-time high recorded in July 2008. Over the past few years this zone has proven quite important. The low in 2012, for instance, came from right around this level. The low in 2010 also came from just below this level, but perhaps more importantly the chart above shows that the exchange rate has never managed a monthly close under this level. With only two days left in the month and the euro perilously close to this key pivot we will be watching spot intently on Wednesday. A monthly (quarterly/yearly) close under 1.2135 would be a clear negative long-term development that sets the stage for a more serious decline in 2015.

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This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail kkerr@fxcm.com. Follow me on Twitter @KKerrFX