Forex Video Briefing (8/14) – EUR/USD, GBP/USD, USD/JPY
EUR/USD is consolidation above 1.3333. The resistance is the August high at 1.3444, but we are also seeing lower highs, reflecting a descending triangle. Today, we had a bullish attempt, which is holding below 1.34 and the 100-period SMA in the 4H chart. The prevailing trend is strong, and the RSI is below 60, which reflects maintenance of bearish momentum. A very likely scenario will be that after coiling this week, EUR/USD will break below 1.3333, and push to the 1.3295-1.33 lows from Nov. 2013. A break above 1.3445 will be needed to introduce a bullish correction scenario.
GBP/USD fell sharply yesterday after UK jobs data and the BoE quarterly inflation report. Essentially, we saw an earnings index contract in Q2, and then Mark Carney commented about a heightened concern regarding wage growth. While he did not say it, the Monetary Policy Committee might not be able to raise rates in 2014 based on these concerns, which we saw were reasonably based at least from Q2 jobs data. At this point, GBP/USD is testing the 200-day SMA. With oversold condition in the daily chart, we can expect at least a near-term consolidation, but the upside might be limited to the 1.6770 area for now. A break above 1.6850 (this week’s high) would be needed to introduce any bullish correction scenario out of the intra-session time-frame. The next support could be a common support/resistance around 1.6580.
The USD/JPY pair has been drifting higher this week, after bouncing up from about 101.50. This market had a sharp retracement, but is still maintaining a bullish outlook in the 4H chart, now that price has returned above the 200-, 100-, and 50-period SMA in this timeframe. I would like to see price dip and show that it can hold above 102. It would help me gain more confidence for the bullish outlook, which has 103 in sight, as well as the 103.75-104 highs from March and April.