Forex Video Briefing (9/30) – USD/JPY, EUR/USD, GBP/USD
The USD/JPY made a new high on the week overnight, pushing to 109.85 before stalling. The 1H chart looks very bullish with consistently higher highs and lows, with the 200-, 100-, and 50-simple moving averages (SMAs) in bullish alignment, sloping up, and spreading apart. Price is also above these moving averages, so everything is still bullish, and we should not be surprised if traders find the current dip as an opportunity to buy towards the 110.00 handle. It will take at least a break below 109.20 to open up a possible bearish correction. Then a break below 109 would be an even stronger sign of bearish correction, especially if the 1H RSI also dips below 40 to show loss of bullish momentum.
EUR/USD fell overnight to a new low on the year at 1.2571. The 1H chart is bearish, so the current rally might see resistance at the previous support area between 1.2663 and 1.2681. There is still further downside, with the next key fibonacci retracement of 78.6% (of the 2012-2014 rally) at 1.2459. With the weekly RSI in extreme oversold condition, we should probably expect some consolidation here. We will have to see how the market reacts after Thursday’s ECB decision. I would lean on the reaction to be bullish just because it seems like the market is pricing in more QE, and that is not a guarantee.
GBP/USD also carved a new low on the week. The 1H chart is bearish, and the pullback is now testing the previous support area as resistance. If price can hold below 1.6240, there is still downside risk not only back to the 1.6166 low on the week, but also the 1.6051 low on the month. The daily chart also shows the market to be bearish, so the pressure is indeed downwards. A break above 1.63 however might keep the pair in consolidation for a while longer.