Dollar Retreats ahead of Holiday
Dollar weakens overnight as traders lighten up positions following worse than expected new homes sales report from US as well as strong rebound in crude oil. Technically, the greenback should have made a short term top and we'd expect some more pull back as holiday weekend approaches. Main focus today will be on US durable goods orders which are expected to rebound in November by rising 0.5% while ex-transport orders are expected to climb 1.0%.
BoJ minutes released today revealed that many members agreed the bank would "maintain its stance of responding promptly to changes in the market situation." Also BoJ will "adopt the most effective method for money-market operations that conformed to changes in financial markets." Recently, BoJ has also made it clear that it will not "tolerate a year-on- year rate of change in the CPI equal to or below zero percent." Yen remains soft against as markets are speculating more quantitative easing measures from BoJ and yen would become the favorite funding currency in 2010 again.
Looking at the dollar index, the break of 77.86 support suggests that a short term top is in place at 78.45 and pull back should be seen in near term to lower channel support (now at 76.78). But after all, downside is expected to be contained well above 75.58 resistance turned support and bring another rise to develop and five wave sequence from 74.19. Such rally from 74.19 is still expected to extend further to 89.62 to 74.19 at 80.08 in the least bullish scenario.
USD/JPY Daily Outlook
Daily Pivots: (S1) 91.33; (P) 91.60; (R1) 91.89; More.
With 4 hours MACD crossed below signal line, an intraday top is in place in USD/JPY at 91.86 and bias is turned neutral. Some retreat should be seen to 4 hours 55 EMA (now at 90.36). But still, another rise is in favor as long as 88.96 support holds. ABove 91.86 will target 92.31 resistance first and then 100% projection of 84.81 to 90.75 from 87.36 at 93.30 next. However, note that break of 88.96 support will argue that whole rise from 84.81 has finished with bearish divergence conditions in 4 hours MACD. Focus will then be shifted to 87.36 support for confirmation.
In the bigger picture, as noted before, there is no clear indication of medium term reversal yet as USD/JPY is still trading well below 55 weeks EMA (now at 94.54) as well as the trend line resistance at 94.44. Whole down trend from 124.13 could still be in progress and might extend towards 1995 low of 79.75 after completing the rebound from 84.81. However, note that sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
Dollar weakens overnight as traders lighten up positions following worse than expected new homes sales report from US as well as strong rebound in crude oil. Technically, the greenback should have made a short term top and we'd expect some more pull back as holiday weekend approaches. Main focus today will be on US durable goods orders which are expected to rebound in November by rising 0.5% while ex-transport orders are expected to climb 1.0%.
BoJ minutes released today revealed that many members agreed the bank would "maintain its stance of responding promptly to changes in the market situation." Also BoJ will "adopt the most effective method for money-market operations that conformed to changes in financial markets." Recently, BoJ has also made it clear that it will not "tolerate a year-on- year rate of change in the CPI equal to or below zero percent." Yen remains soft against as markets are speculating more quantitative easing measures from BoJ and yen would become the favorite funding currency in 2010 again.
Looking at the dollar index, the break of 77.86 support suggests that a short term top is in place at 78.45 and pull back should be seen in near term to lower channel support (now at 76.78). But after all, downside is expected to be contained well above 75.58 resistance turned support and bring another rise to develop and five wave sequence from 74.19. Such rally from 74.19 is still expected to extend further to 89.62 to 74.19 at 80.08 in the least bullish scenario.
USD/JPY Daily Outlook
Daily Pivots: (S1) 91.33; (P) 91.60; (R1) 91.89; More.
With 4 hours MACD crossed below signal line, an intraday top is in place in USD/JPY at 91.86 and bias is turned neutral. Some retreat should be seen to 4 hours 55 EMA (now at 90.36). But still, another rise is in favor as long as 88.96 support holds. ABove 91.86 will target 92.31 resistance first and then 100% projection of 84.81 to 90.75 from 87.36 at 93.30 next. However, note that break of 88.96 support will argue that whole rise from 84.81 has finished with bearish divergence conditions in 4 hours MACD. Focus will then be shifted to 87.36 support for confirmation.
In the bigger picture, as noted before, there is no clear indication of medium term reversal yet as USD/JPY is still trading well below 55 weeks EMA (now at 94.54) as well as the trend line resistance at 94.44. Whole down trend from 124.13 could still be in progress and might extend towards 1995 low of 79.75 after completing the rebound from 84.81. However, note that sustained trading above the medium trend line resistance will be the first signal of medium term reversal and in such case, focus will turn to 101.43 resistance for confirmation.
