Dollar setback Euro rebounded strongly earlier today in European session, boosted by much better than expected Germany industrial production. which gained 1.1% in October versus expectation of 0.5%. Also, ECB Chief Economist Otmar Issing today said the bank expects economic growth to strengthen and inflation risks to rise in the 12 nations that share the euro. An economic revival in Germany, Europe's biggest economy, may give the ECB room to raise interest rates again after the first increase in five years this month.
Jobless claims rose to 327k, above expectation of a slight drop to 317k. BoE left rates at 4.5% as widely expected. EUR/USD EUR/USD rebounded strongly today to as high as 1.1786. Above 1.1766 resistance has delayed to down trend resumption case. Recent volatility has made forecasting very difficult and in particular in prolonged consolidation like this. At this point, we're still putting attention to the falling trend line (now at 1.1852). As long as this level holds, we're still expecting medium term down trend from 1.2587 to resume sooner or later. However, intraday bias remains on the upside as long as minor support of 1.1759 holds. Touching of 1.1759 will suggest the rebound from 1.1703 have finished and fall towards 55 hours EMA (now at 1.1746 is expected). Break will encourage further decline towards 1.1703 support and then mentioned longer term fibo support of 38.2% retracement of 0.8344 (2001 year low) to 1.3668 (2004 year high) at 1.1634 first. But still, in case of a firm break above the falling trend line, this medium term bearish view will be seriously dampened.
GBP/USD Cable rebounded strongly today to above 1.7453 resistance. As discussed before, breaking above the falling trend line has dampened the medium term bearish view. However, the rise from 1.7047 is not convincing too. We'll keep close attention to the next development, in particular, whether cable can stay firm above the falling trend line. But right now, as long as 1.7361 support holds, bias remains on the upside for further rally towards next cluster resistance of 1.7607 (61.8% retracement of 1.7902 to 1.7097 at 1.7594 and below 1.7361 will shift bias for sideway trading first.
USD/CHF USD/CHF fell sharply today in tandem with EUR/USD and reached as low as 1.3047 so far. Below mentioned support of 1.3088 has delayed medium term up trend resumption. But still, as long as the rising trend line support (now at 1.3035) remains solid up trend from 1.2239 should resume sooner or later. However, intraday bias remains on the down side as long as 1.3080 resistance holds. Above will encourage further rally towards 55 hours EMA (now at 1.3108) and probably further towards 1.3158 resistance. But still a firm break above 1.3230/35 resistance is needed to confirm it up trend resumption and bring rally towards 1.3283 high for retest, and then towards 61.8% projection of 1.2695 to 1.3282 from 1.2991 at 1.3354.
USD/JPY USD/JPY's consolidative trading continues. Today's fall to 120.25 was just supported by 4 hours 55 EMA and cluster support of 120.20 (with 38.2% retracement of 118.33 to 121.38 at 120.21). Rebound from there indicates USD/JPY could has extended the current range of sideway trading to between 120.20 and 121.38. As 4 hours MACD remains weak, further consolidation should continue. As discussed before, USD/JPY is now sitting inside an important resistance zone with 100% projection of 101.65 to 113.74 from 108.75 at 120.84, long term pattern resistance at 120.71 and long term falling trend line (from 147.68, 1998 year high to 135.20, 2002 year high) which is now sitting at 121.53. Hence, we should be seeing continuous loss of upside momentum and a major reversal could be around the corner. But still, even though the rally from 108.75 is clearly over extended, considering the uninterrupted strength of the rally from 108.75 (without any sizeable correction yet), more evidence is needed to indicate USD/JPY has topped. Otherwise, the rise could still continue.
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