Euro firms while Yen under pressure

Yen hits 6 month low against Dollar

On Wednesday the Euro strengthened as investors waited to see whether a fragile economic recovery is underway in the Euro zone. Concerns about the latest Greek bailout deal continued to weigh the markets though..

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The debt-stricken Euro region should avoid falling into a technical recession if the Euro area and German Purchasing Manager’s Indexes (PMIs), due out early today, confirm the modest expansion seen in the January data.

Initial Improved risk appetite after the Greek deal announcement though, has given way to fresh doubts over whether Greece will make the agreed budget cuts and whether the plan itself will be enough to make its debt sustainable.

Greece is bracing itself for large, and possibly violent, protests against further budget cuts, called by trade unions as the public mood hardens. This follows the 130bn-Euro (£110bn; $170bn) bailout deal agreed to on Monday, which is aimed at avoiding bankruptcy.

Greece has just over a week to approve a round of spending cuts of more than 3bn Euros related to the bailout.

Greek opinion polls also suggest that the two parties in the Greek parliamentary coalition, which currently dominate parliament, are facing huge losses at the next election, which is scheduled for April.

The Euro pulled back from near two-week highs of $1.3293 on Tuesday, and was up 0.14 percent to $1.3258 earlier today. It also hit a 3-month high against a broadly weaker Yen.

The Yen had weakened to above 80 Yen to the Dollar, on the back of rising oil prices and an easier monetary policy stance by the Bank of Japan having hit demand.

In fact, the Yen reached a 6-month low against the Dollar and a 3 month low against the Euro at 106.145 Yen.

The Yen has been moving lower since the Bank of Japan surprised investors last week with additional monetary easing. Japan has indicated that it will continue to monitor currency moves and respond “appropriately”.

The finance ministry have attributed the Yen’s weakening to the Euro zone’s agreement on a Greek rescue package and to the BOJ’s easing.

All the best!
Adrian Jones

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EXOTIC TRADING

Yen extends drop, Euro up

The Japanese Yen went on to hit a six month low against the US Dollar on Wednesday as Yen selling continued.

This is a direct result of the Bank Of Japan’s monetary easing actions last week. Analysts also believe that the Yen has come under additional pressure after Japan’s current account surplus fell to a 15 year low last year.

The Euro rose against the Yen but struggled to make headway, as initial optimism over the Greek bailout deal quickly gives way to concerns about economic growth and implementation risks.

News Watch For EURJPY

The Euro has one High Impact news announcement due tomorrow.

09:00am GMT – German Ifo Business Climate

The rest of the week is all clear until the close of trading this Friday.

EURJPY Analysis

I got a signal to enter a Sell trade yesterday, and we’re currently looking at the possibility of re-entering the market so take a look at the chart below:

Regular Bearish Divergence was present on my charts, so as soon as a candle had closed below the first black, dashed trendline trenline.

The sell order was filled at 105.718 with my Stop Loss and Take Profit set 40 pips away. I closed a portion of the position when price reached 50% of my take profit and moved my Stop Loss to breakeven.

At this point I was in a free trade and it looked likely that price would continue down but price stalled and tagged our stop loss around breakeven (actually taken out with about 4 pips profit).

At the moment though, Regular Bearish Divergence is present once more so you’ll notice that I have inserted a new black, dashed trendline across the latest lows.

Price is also at the top of the Bullish Channel trendline so there’s a high probability that we will see a bounce off this resitance area.

Should the Regular Bearish Divergence hold and price close below the new black, dashed trendline (and/or the 105.700 level), I’ll be looking to go short once more with targets potentially at the previous low (105.100 area) or the 104.650 area.

Take care and all the best!

Happy trading
Wesley

Senior Trader for World Class Trading Stars

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We saw the Gbp slip yesterday once again without any entry opportunities. We can still consider looking for a bullish move since the hidden divergence is still valid on the 4h charts. We do have something interesting going on, however on the Daily charts that may affect an upside move limiting it quite a bit. At the moment we have a head and shoulders pattern forming on the daily.

A break of the neckline may see a nice fall off down to the 1.5390 area for around 275 pips. We can certainly play this from the 4h charts and wait for a close passed the neckline for an entry or even a close passed the neckline and waiting for a pullback to it before going short.

The red dashed line is the 200 period simple moving average which tends to provide strong areas of support and resistance on all time frames. The fact that it is sitting right below the neckline, it can be traded as such. If we get a close below the 200sam we can consider going short. We can alternatively wait for a close passed it and a pullback to it before going short as well for something a little more conservative.

In the news today we had the MPC Meeting Minutes for the Gbp earlier at 4:30am Est which is what caused the big spike downwards. The only other thing we have coming up is Existing Home Sales for the Usd at 10:00am EST. Be careful around this time as it is a high impact news release.

Good luck and safe trading!

Josh
Senior Trader For Forex Master Method

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Wednesday 22nd Feb 12

EUR/USD 4 hour chart

1st Resistance – 1.3282
2st Resistance – 1.3320
3nd Resistance – 1.3459

1st Support – 1.3200
2nd Support – 1.3165

Monthly Pivot – 1.2982

Weekly Pivot – 1.3132

Strategy – Quick in and out trades from support and resistance areas.

Tactics – Wait for pullback to areas of confluence.

I closed the trade I entered at 1.3244 with a small 18 pip gain. I did that because I could see we were moving into consolidation. I expected the market to reverse around my entry level. As it didn’t do that, my reason for being in the trade was no longer there. I don’t mind if it takes time for a trade to develop but if it doesn’t do what you expected, it is often better to get out the trade.

Presently flat. I’m not sure about the next move, so I won’t do anything. I’m looking for a convincing break below 1.3200, or a 4 hour close above 1.3321 before entering another trade on this pair.

Mark McRae

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