forex video briefing (7/11) – USD/JPY, EUR/USD, GBP/USD
As the USD/JPY moves toward the 101 handle, below which is the 100.75 low on the year, traders are consolidating the pair to end the week. The trend in the 4H chart is still bearish, but we can expect some short-term support as we approach the 2014-low and a descending triangle seen in the daily chart. There are reasons to believe the market will break the 2014-low eventually. We have failed bullish attempts, or clear-out price action that strengthens the case for the bearish outlook. Also price is now starting to trade below the 200-day SMA. If price can hold below this moving average and the 102 handle, the pressure will remain on the lows on the year.
EUR/USD shows that despite the soft USD, the Euro is even weaker. It is now showing bearish continuation signals in the 1H, 4H, and daily time-frame. All are showing bearish breakouts, and slingshot action. You can see the daily chart with the double top, the 4H chart with price fading the June rally, and the 1H chart with this week’s rally being broken. The pullbacks and the bearish continuation swings confirm the breakouts. So with these slingshot developments, the EUR/USD looks poised to test the 2014-lows around 1.3475, up to the June lows in the 1305-1315 area.
The euro is weak, so EUR/USD’s bearish outlook can’t imply USD-strength across the board. However, the gbp has been strong. While it might be taking a breather as well, the USD is showing resilience as GBP/USD trades back toward July’s consolidation support, which is at 1.7085. I would expect the prevailing trend to prevail. If the 4H RSI holds at 40, and price stalls and turns up from 1.7085, look for another attempt to clear the June and 2014 highs around 1.7175.