US retail sales for March improved to 1.1%, after an upwardly revised 0.7% in February. The headline reading beat forecast of 0.8%. The core reading – excluding auto – also improved, to 0.7% after a 0.3%, and beat forecast of 0.5%. The headline reading was the best since September 2012, and reflects a rebound from the poor readings during Dec-Feb, winter months. USD/JPY has been trying to stabilized after last week’s decline, and seems to have done so after finding support at 101.31…

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This week, the US Dollar fell sharply against JPY and CHF primarily lead by the minutes from the Federal Reserve’s March 18-19 meeting, which changed market expectation of the first interest rate hike even if the US unemployment rate dropped below 6.5% threshold.

The US Dollar is now headed for its first weekly loss against JPY and CHF in last four weeks. Given the backdrop, here is a technical update on USDJPY and USDCHF currency pairs.

For Technical Update on EURUSD, GBPUSD and NZDUSD, READ: Important Major Currency Pairs – Technical Update

USDJPY

  • After a decisive drop below 100-day SMA support near 103.00 mark, the pair dropped sharply below 102.00 level confirming a break below a short-term ascending trend-channel formation on daily chart. From current levels the pair seems more likely to continue its depreciating move towards a very strong support near 101.00-100.80 zone, comprising of 200-day SMA and an ascending trend-line support extending from Feb. 2013 through June, Oct. and Nov. 2013 lows. Moreover, a decisive break below 101.00 support region, marking a break below the ascending trend-line support, could infuse additional near-term weakness for the pair initially towards 100.00 psychological mark, also coinciding with 61.8% retracement level, and further towards 99.30 horizontal support.
  • However, should the pair manage to rebound and move back above 102.00 area, previous intermediate support now turned immediate resistance, the pair could possibly continue the pull-back towards an important pivot near 103.00 mark. This 103.00 region may now possibly cap any near-term up-move for the pair. However, should the pair continue with its rebound and move back above 100-day SMA, important pivot near 103.00 mark, it could possibly continue strengthening towards an intermediate horizontal resistance near 104.00-20 zone.

USDCHF

  • Following a test of the 100-day SMA resistance, this week the pair fell sharply, giving up all of its gains registered in the previous three weeks, and moved back below 0.8800 mark. The pair currently is hovering around a very important support near 0.8780-60 zone. Should the pair fail to hold this important support, it is likely to witness accelerated weakness initially towards testing over two-year low touched in March 2014 and further towards testing Sept. 2011 lows of 0.8660-50 zone, also coinciding with the lower trend-line support of a descending trend-channel formation on daily chart.
  • Alternatively, should the pair now witness some rebound, it is likely to face immediate resistance near 0.8800 horizontal zone. This is closely followed by another horizontal resistance near 0.8860-0.8850 horizontal zone. However, the pair is likely to confront major resistance near 100-day SMA region, 0.8900-0.8920 zone. Should the pair now strengthen above 100-day SMA, it could possibly break past another strong resistance near 0.9050 level, comprising of 200-day SMA, also marking a break above the upper trend-line resistance of a descending trend-channel, which could further trigger sharp up-move for the pair in the near-term.

 

Haresh Menghani
Senior Market Analyst
Admiral Markets
 
At any use of the analytical material taken from the site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», reference to the company site is obligatory.

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The greenback seems to be maligned this week. The exodus from the USD can be attributed to a pullback in the Fed’s rate hike projection, which was revealed in the FOMC meeting minutes on Wednesday. The market was already pricing in a weak USD ahead of the release, and although there was extension of a USD-softness afterwards, we did see the decline slowdown. The Jobless claims data today could provide an initial impetus to shift market focus toward improvements in jobs data…

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The market started the week softening the USD across the board. We saw rallies in EUR/USD, GBP/USD, AUD/USD, and declines in USD/JPY, USD/CHF, and USD/CAD just to name a few USD-crosses. Traders were walking back recent USD-strength, one that was partially based on expectations that the Fed is considering hiking rates in 2015. The FOMC minutes had 3 main points: 1) Economy is still slow in recovering, and China’s downturn won’t help. 2) Members walking back some optimism shown at the turn of the the year – recent soft data is not just due to the cold…

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USD/JPY is in a sharp pullback. The 4H chart shows that a similar type of decline happened in March, where the market walked back the enter prevailing swing. At that time, the 101.20 low held, and the market remained sideways, keeping a slight bullish bias because it was able to make a new high. (usdjpy 4h chart, 4/8) At the end of March, we made another bullish run, from 101.70 to 104.12. Ahead of Wednesday’s FOMC meeting minutes, USD/JPY is walking back this rally as well. You can see the sharp knife falling and breaking a projected rising support. As it tests this support, the 4H stochastic is oversold, so there might be some near-term support around 102.20. Support at 101.70 will be key to maintain a bullish outlook since a hold above that, let’s say at 102, would show ability to hold a higher low. It is also where a rising trendline is projected as seen in the 4H chart. Technically if it comes down to 101.20 and holds, we can’t shelf bullish outlook yet, but I would think that reflects a choppier market, and one that still has downside risk to wipe out 2014′s low before any meaningful bullish attempt. Fan Yang, CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes. Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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EUR/USD edged lower this week, continuing a bearish mode since it retreated from the 1.3966 high in March. The ECB event risk on Thursday weighed on the euro because the ECB remained dovish. When we look a the daily chart , we see that the bearish run in the past few weeks is within a bullish market. There is still downside risk toward the 1.36 handle, where the 200-day SMA looms. However, with the daily stochastic below 20, I would not be surprised if we get a bullish attempt early next week even before 1.36…

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USD/JPY rallied sharply as we got into the 3/28 US session. This is coming off a bout of risk appetite that is dominating the Friday US session so far. The 1H chart shows a false break down of a week-long consolidation range. Price climbed back up quickly, during the European session and accelerated during the start of the US session. It is now above the 2-week high of 102.68…

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This week started with manufacturing data from China, Germany (and other European countries), and finally the US. The March Flash Manufacturing PMI for the US came in at 55.5, which fell from an upwardly revised 57.1 in February, and missed forecast of about 56.6. 55.5 reflects expansion in manufacturing activity, but just at a slower pace than January. So it wasn’t “bad”, but rather uninspiring…

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