USD/JPY Under Pressure, Sterling Hits 5-Year Low Verse USD
Swissquote Bank Ltd | Apr 14, 2015 08:24AM ET
Market Brief
Yesterday was supposed to be a quiet day in the FX market, this was without reckoning with Koichi Hamada’s interview on Japanese TV. Prime Minister Shinzo Abe's adviser declared that monetary policy is working well in Japan and added that a level of 120 in USD/JPY is weak while a level of 105 is appropriate considering purchasing power parity. On the news, the dollar depreciated sharply to as low as 119.71, before stabilizing around 119.93. The USD/JPY therefore left its hourly uptrend channel and sits currently on the 119.74 support (Fib 38.2% on March sell-off). The following support area lies at 118.80/119.20 (Fib 23.6% and multiple lows from early April). EUR/JPY is currently printing new lows for 2015 and reached 126.21 this morning. The next key support stands at 124.97 (low from June 2013), however we expect EUR/JPY to remain under pressure amid Hamada comments and monetary easing from the BCE.
In Asia, most equities paired losses, the Hang Seng erased half of yesterday gains and is down almost 1% to 27,745 while the Shanghai Composite is up 0.7% in one day. AUD/USD is still on sell and reached 0.7553 yesterday, failing to break the next support of 0.7533. Overnight the AUD tried to break the 0.7629 (Fib 23.6% on late March sell-off) support but was unsuccessful. Both hourly and daily RSI are below the 50% level indicating that Aussie buyers are out-numbered.
EUR/USD finally broke the 1.0570 support and is heading to the next support of 1.0458 (low from March 15). Fresh boost will be needed to break this key support as it also corresponds to a low from March 2003 (1.0504). US futures are mixed this morning with the S&P 500 up by 0.15% and the Dow Jones and NASDAQ down by 0.35% and 0.26% respectively.
In Europe, DJ Euro Stoxx 50 and CAC 40 futures are up 0.45% and 0.45% respectively while German, Swiss and UK shares are red on the screen, down -0.2%, -0.5% and -0.15% respectively.
GBP/USD attempted a first break of the 1.4636 support (low from March 18) to print a new low to 1.4566, a level unseen since June 2010. UK CPI for March is due today and expected at 0.2%m/m or 0%y/y. EUR/GBP is sliding slowly but surely and went through the 0.72 support (Fib 50% on March rally). On the downside, one can finds a key support at 0.7156 (low from March 19 and Fib 38.2%), then 0.7120 (low from March 17).
Get The News You Want
Today’s key event are the CPI (March) from Sweden (exp.0.2%m/m); CPI, the Retail Price Index and Producer Price Index from UK, Retail Sales (exp. at 1.1% vs. -06% in February) and PPI from the US. A higher read of Retail sales would suggest that the economy is slowly recovering in March after a disappointing month of February dampened by a harsh winter and global economic slowdown.
Currency Tech
EUR/USD
R 2: 1.1114
R 1: 1.1043
CURRENT: 1.0560
S 1: 1.0504
S 2: 1.0458
GBP/USD
R 2: 1.5137
R 1: 1.4990
CURRENT: 1.4596
S 1: 1.4500
S 2: 1.4231
USD/JPY
R 2: 123.00
R 1: 122.03
CURRENT: 119.73
S 1: 119.64
S 2: 118.18
USD/CHF
R 2: 0.9984
R 1: 0.9812
CURRENT: 0.9757
S 1: 0.9674
S 2: 0.9450
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