Price & Time: Where To Next For USD/JPY?

Talking Points

• USD/JPY tests key long-term retracement
• AUD/USD breaks down from multi-week consolidation
• EUR/USD tests key retracement level

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Foreign Exchange Price & Time at a Glance:

Price & Time Analysis: EUR/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• EUR/USD traded at a new low for the year ealier today befor finding support just below the 78.6% retracement of the 2012-2014 advance in the 1.2455 area
• Our near-term trend bias is lower in the euro while under 1.2620
• A close under 1.2455 is needed to set off the next leg lower in the rate
• A minor turn window is eyed tomorrow
• A daily close over 1.2620 would turn us positive on the euro

EUR/USD Strategy: Like the short sude while below 1.2620.

Price & Time Analysis: AUD/USD

Charts Created using Marketscope – Prepared by Kristian Kerr

• AUD/USD has turned lower today from the narrow range that has dominated trading over the past few weeks
• Our near-term trend bias is lower in the Aussie while under .8860
• The year’s closing low around .8660 is an important downside pivot with a daily close below this level needed to confirm a resumption of the broader decline
• A minor turn window is eyed tomorrow
• A close above .8860 would turn us positive again on AUD/USD

AUD/USD Strategy: Like selling into strength while below .8860.

Focus Chart of the Day: USD/JPY

The surprise announcement by the BOJ last week to expand monetary stimulus has seen USD/JPY storm higher. On Friday the pair took out the former year high at 110.10 and this morning it surpassed the key 112.40 61.8% Fibonacci retracement of the 2002-2011 decline and the 261.8% extension of the first half of the year’s range at 113.10. The market has become seemingly unstoppable There is one major potential reaction zone ahead and that is the 78.6% retracement of the 2007-2011 decline at 113.75. Over the past year the exchange rate has reacted well to these long-term retracements so a reaction from the pair at this key resistance cannot be completely discounted – especially with sentiment back at multi-year extremes (DSI in JPY fell to just 3% bulls on Friday). From a longer-term Fibonacci perspective a multi-day close over this level would be very positive indeed and set the stage for an eventual push towards the next key cluster of resistance around 120.00.

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

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