Euro touches new highs as Yen slides again

Euro gains on Dollar

Euro hits a 2 and a half month high, while Japan’s Yen drops to its lowest point against the US Dollar in seven months.

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Today, the Euro rose to a 2 and a half month high against the Dollar. The rise was as a result of the German IFO institute’s survey. The survey results beat forecasts and raised expectations that Germany, Europe’s largest economy, would escape a recession.

The Munich-based IFO think tank declared that its business climate index, based on a monthly survey of some 7,000 companies, had risen to 109.6 in February, beating expectations of 108.8. This figure is at its highest level since July 2011 and marks the fourth increase in a row.

While the Euro had earlier started to climb on market speculation of a strong IFO number, it jumped to $1.3330 on release of the survey.

Japan’s Yen, on the other hand, dropped to its lowest level against the US Dollar in seven months.

This signalled a respite for concerns over the strong Yen hurting exports and the economy.

The Bank of Japan’s surprise increase of its stimulus measures were part of the reason for the fall. In fact, the Yen has fallen by 3.7% against the Dollar since the 14th of February.

The Bank of Japan (BOJ) expanded its asset purchase programme by 10tn Yen ($130bn; £83bn) in an effort to boost growth. It also has left the cost of borrowing unchanged, at between zero and 0.1%.

A strong Yen has hurt profit outlooks for Japanese manufacturers, with some focussing on overseas production.

The Dollar was at 80.30 Yen earlier today, its highest level since July 2011.

Another factor for the Yen’s slide, is the strengthening of the US dollar after better than expected US economic data.

All the best!
Adrian Jones

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EXOTIC TRADING

Yen Under Pressure While Euro Remains Resilient

The Japanese Yen dropped to a new 7-month low against the US Dollar, while the Euro remained strong amidst fears of slipping into recession.

Key support levels continue to give way which in turn encourages more Yen selling. As a result, the Euro rose to a 3-month high against the Yen.

News Watch For EURJPY

German Ifo Business Climate data was released earlier today. Data was better than forecast which means more good news for the Euro. There are no further news releases scheduled for the EURJPY pair this week.

EURJPY Analysis

I’ve been tracking Regular Bearish Divergence on my charts but with the Euro showing some unusual strength, the entry remains elusive. Take a look at the chart below:

You can see that price is hovering around the upper Bullish channel trendline, while the Regular Bearish Divergence pattern remains intact. The breakout of the black, dashed trendline occurred outside my trading hours but we can use this as a trigger for a more conservative entry.

Price has since retreated and went on to form a new High. So, if the Regular Bearish Divergence pattern holds firm, and price breaks out and closes below the low of the breakout candle (red, dashed vertical line), we may enter a sell position.

Potential targets include the 105.700 level and the previous Swing Lows.

For a more aggressive entry, insert a new trendline across the Swing Lows and consider any closes below these lines as potential trigger levels.

We’ll have to wait and see how it plays out for now, so be safe out there. All the best!

Happy trading
Wesley Govender

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We were taken into a trade yesterday at the break of the neckline of our head and shoulders pattern. T the moment, price is floating around the entry level and seems to be retracing a bit. On the Daily chart we can begin to draw a downwards channel and we can also see that price is still below the trend line. We may see some bullishness back up to the trend line.

The four hour chart has just bounced off of the 200 sma which as I noted yesterday provides a pretty strong level of support and resistance.

I will be expecting price to keep rising a little bit and find support at the back side of the trend line it broke yesterday before another move down.

In the news today we got Usd Unemployment Claims at 8:30am EST and Crude Oil Inventories at 11:00am EST as well. The Unemployment Claims release is a high impact news release so be carefull as this can cause the market to become erratic.

Have a great day and safe trading!
Joshua Schultz

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Thursday 23rd Feb 12

GBP/USD 4 hour chart

1st Resistance – 1.5763

1st Support – 1.5648

Monthly Pivot – 1.5599

Weekly Pivot – 1.5776

Strategy – Play off support and resistance.

Tactics – Wait for pullback to areas of confluence around support and resistance.

If you look at the GBP chart you can see that the support of 1.5648 area has been tested and shown to hold. This makes for a low risk trade because you can place your stop on the other side of support.

I entered originally at market with a rate of 1.5674. My original stop was just below support at 1.5648, but I have now moved the stop to just above breakeven and is presently sitting a 1.5676.

The target is just below resistance at 1.5759.

Mark McRae

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