NFP Puts USD Recovery on Hold

This week, The USD had some early signs of recovery. It was mainly stabilizing after being pressured the previous weak. There were some strong USD gains on Wednesday, but this did not follow through on Thursday, and by Friday’s NFP, the market turned back USD-weakness. The Japanese yen continues to gain in this risk averse environment, after being pressured earlier in the week.

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EUR/USD Surges After NFP

• Daily: The EUR/USD broke above this week’s consolidation range today, driven by the worse-than-expected NFP.
• The EUR/USD is at an area of significant resistance. The 1.3250 to 1.3300 area is resistance, but if broken, should again see resistance at 1.35 or the 200SMA.
• The RSI in the 1H chart shows bullish continuation momentum.
• The RSI in the daily shows overbought RSI readings, but also a signal of intermediate bullish momentum.
• I am very uncertain of the EUR/USD at the moment. Today’s moves proved that signs of greenback recovery earlier this week, were head fakes.
• The question remains for me: how much weaker can the USD get in the short-intermediate term. Before considering the dollar recovery, I maintain that we should look for the USD to gain across the board, especially against the JPY, and CHF, which has not happened yet.
• I have no projection at this point, but will continue to stalk the market.
• If there is a decline, I will look for 1.30 as support. If the 1.30 level breaks, 1.2550 may be the next support.

USD/JPY Remains Bearish after a Head-fake Reversal Signal

• 1H: The USD/JPY surged on Wednesday, and the momentum showed promise of a reversal. However, the market stalled at 38.2% retracement, the first important resistance.
• The inability to break above after a slight correction from the rally showed that the rally was not sustainable. The inability of the RSI to break above 70 with strength was non-confirming for the bullish outlook as well.
• Another failed confirmation was the RSI to break above 60, after supported at 40. The failed attempt shows the market is either ranging or still bearish. It is still bearish.
• So the decline continues, and in the daily we see it reaching closer to the 2009 low of 84.80.
• If the market reaches here, some scalpers may consider loading on long, so there should be some support here. Then, if the market does not show promise to the upside for the USD/JPY, these traders will be out very soon, and the market action will reflect a weak rally.
• For longer-term swing traders, USD weakness is overextended, but is persistent.
• The 1995 low in 82.74, and should support the pair if the 2009 low of 84.80 breaks.

GBP/USD Next Resistance near 1.63

• 1H: The GBP/USD is also rallying and like the many USD crosses broke an important level to suggest further weakness in the greenback.
• A swing projection for the GBP/USD targets 1.6235.
• The RSI is convincing of the bullish mode, as it came down from overbought, supported at 40 (except some temporary break), and came back up above 60 – signs confirming bullish momentum.
• Daily: In the daily, the RSI is pushing further with price. In the Chartist Corner this week, a participant asked whether cable could go to 1.62. My opinion at the time is that it should have a correction before getting there.
• I still maintain this to be a higher probability scenario than a surge towards it, but if today’s action is not an exhaustion move, I would be wrong.
• The target for today’s move is indeed 1.6235. In the daily, we see this to be a logical area of resistance.
• Still this is like a runaway train accelerating towards its next anticipated stop. A throwback to the 200 moving average or close to 1.56/1.55 should provide better reward to risk ratio for the bullish outlook to 1.6235.

USD/CAD Breaks Below Congestion Pattern

• 1H: The USD/CAD is behaving as expected. After breaking below the triangle last week, it did indeed go to 1.018, and even lower, to just above 1.01, before finding support.
• The 1H chart shows a reverse head-and-shoulder bottom, while the daily chart shows a candlestick combination suggestive of a reversal.
• Looking at the 1H chart, the resistance resides near 1.0285, 61.8% retracement and 200-period simple moving average. A break above that suggests a rebound is in place.
• A rebound from here should see USD/CAD go t0 1.04. A break above 1.04, may see a rally to test 1.07/08 resistance zone.

EUR/GBP Stalking Pullback Rally

• 4H and Daily: Last week, the EUR/GBP was seen breaking below a head and shoulders and the SMA 50 in the daily chart. This week, the market could not continue the decline further. Instead, it was in a slight correction as seen the 4H chart.
• The 4H chart also shows the correction retesting the moving averages in this time-frame. The 0.8330 to 0.8350 area is a resistance zone.
• Next week, see if the market can top off no higher than 0.8360. This should suggest completion of correction, and bearish continuation.
• If the market indeed breaks below the correction channel, a swing projection targets 0.8220.

AUD/USD Stalking Path to 0.94/0.95 area.

• 4H: The 4H chart shows what I believe could be a count for the AUD/USD. We are probably in a bullish impulse wave 3. However, within 3, I have not seen a wave (iv) and (v) yet, so I believe it is not complete.
• This week, instead of going for wave (iv), the market had to complete wave v. A decline is imminent.
• Wave (iv) can not break below 0.8880 area. This can be the lowest anticipated support if the market does decline next week.
• Much like the cable, which I believe should correct before heading towards 1.6235, I believe the AUD/USD should correct towards 0.8880 before heading above to 0.94/0.95 area.
• This decline could be signaled if the market breaks below a rising trendline and the 50-period moving average, which lies within the channel. Then the 200 moving average, and 0.8880 area can be treated as support.
• Daily: The daily chart shows that its 200period moving average is already near the 0.8880 area, but closer to 0.90. In any case, a decline supported here can slingshot the pair towards 0.94/0.95.

GBP/JPY Breaking Above Congestion Pattern

• 1H and Daily: The GBP/JPY continues to consolidate after leaving a wider consolidation zone. This is seen more clearly in the daily chart.
• The 1H chart shows the details of the consolidation. There is a declining channel, and the count is complete for a 5-wave type. The channel also brought the pair down to 61.8% retracement level at 135.60.
• If the market breaks above the channel, it should target the 140/140.50 area.

Fan Yang
Currency Analyst
Commodity Trading Advisor
fyang@fxtimes.com

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 analyses.