Euro up on short-covering while Yen on the defensive

Sentiment towards Yen remains weak

The Euro hit a 2 week high to the Dollar on short-covering as the Yen hit a 5 month low to the Euro and a 9 month low on sterling.

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Earlier today the Euro moved higher against the Dollar on short-covering, while traders remained bearish against the Yen.

The Yen had dropped to a new 5 month low to the Euro and touched a 9 month trough against sterling. It remained on the defensive following the Bank of Japan’s (BOJ) monetary easing in February.

The Euro had risen by 0.4% to $1.3273, having at one point touched its highest level since the 8th of March at $1.32835 driven mainly it seems, by short-term positioning.

Greece won parliamentary approval for a new international bailout, which has now boosted demand for the region’s assets.

The 17-nation currency advanced against 12 of its 16 major counterparts. The Dollar though weakened ahead of Federal Reserve Chairman Ben Bernanke being expected to inform Congress that financial strains in Europe have eased.

Another factor supporting the Euro is a narrowing in U.S.-German two-year yield spreads, which is currently at roughly 5 basis points, down from around 17 basis points a week ago.

Should the recent U.S. data remain firm, then U.S. yields may continue to move higher.

All the while, Europe still faces some risks to the current Euro strength from continued poor economic news from Spain and Italian labour reform talks.

Italy seems poised for a collision course with the country’s biggest trade union, following talks on reform to an employment protection law which failed to produce a deal.

Sterling was up versus the Dollar having gained 0.1% to $1.5882, ahead of U.K. Chancellor of the Exchequer, George Osborne, delivering his annual budget and the Bank of England due to release minutes of its March 8th policy meeting.

The Monetary Policy Committee had this month voted to keep the benchmark rate unchanged at 0.5% and to adhere to the central bank’s bond-purchase plan at 325 billion pounds.

The Yen has meanwhile dipped broadly.

The Euro has touched a five-month peak of 111.17 Yen, closing in on resistance at its high around 111.57 Yen set on the 31st October 2011.

The Yen also dipped against sterling. The Pound had risen to its highest level against the Yen since June 2011, to 133.02 Yen at one point.

The Dollar dipped a slight 0.1% to 83.68 Yen, a short distance away from an 11 month high of 84.187 Yen a week ago.

Japanese exporters have been selling the Dollar ahead of the end of their financial year on the 31st of March.

Sentiment toward the Yen still remains weak, following its sharp decline over the past month.

All the best!
Adrian Jones

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EXOTIC TRADING

Euro On The Rise, Yen Selling Continues

The Euro rose against the Japanese Yen on Wednesday but the Bullish trend may turn out to be short-lived, as many analysts believe it is being driven by short- term positioning.

Meanwhile, the Japanese Yen appeared weaker with traders favoring a Bearish outlook, prompting more selling of the Japanese currency.

News Watch For EURJPY

There are no High Impact news releases scheduled for the EURJPY pair today but be aware of data due out tomorrow from the ECB President.

EURJPY Analysis

The EURJPY pair managed to breach the 110.550 level is currently on route to the 111.800 level. Take a look at the chart below:

Right now, my indicators show no potential entries but by analyzing the information presented on our charts we can get a pretty good idea of where the market is heading.

You’ll notice that I have temporarily removed the bullish channel and inserted three black, dashed trendlines. Notice how the angles of the trendlines are becoming steeper?

This is a concept known as acceleration. It shows that the price action is increasing in the Bullish direction, but it also highlights areas that we can look for potential reversals.

A close below the most recent trendline could signal the end of the up trend and the remaining trendlines serve as potential targets for short entries.

You’ll also notice that I have inserted black arrows above and below the swing points. Pay attention to how the up and down arrows at the swing highs are getting higher. This tells us that price action is currently being dominated by the Bulls.

If this price action continues we should look to be Bullish. If we start to notice that new swing lows and swing highs are forming below the previous swing lows and swing highs, it is an indication that the Bears may start to dominate price action and push price lower.

This information can help us make better informed trading decisions and paint a clearer picture of where the market is headed. I hope you find these techniques useful to your trading. :)

All the best!

Wesley Govender
Senior Trader for
World Class Trading Stars

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We have some interesting things going on today on the Cable. Last night we were taken into a buy trade which presently we’re floating just around break even. We did this because we were presented with some hidden bullish divergence and right now we’re sitting on the monthly trend line again.

If this monthly trend line holds and we break below the trend line on the hourly chart we’ll have confirmation of regular bullish divergence that is rather exaggerated.

This might sound a tad conflicting such as two signals at the same time, but we have to remember to wait for confirmation. Right now it’s just a possibility and something to keep an eye on. A short based on regular bearish divergence will be confirmed by a cross below our 4h trend line. In which case we can target the 1.5700 area.

In the news today we have plenty of high impact news. The Annual Budget Release for the Cable comes out at 8:30am – high impact, Fed Chairman Bernanke Testifies at 9:30am – high impact for Usd, Existing Home Sales at 10:30am – high impact for Usd, and Crude Oil Inventories – 10:30am – medium impact for Usd.

Have fun and safe trading!

Joshua Schultz
Senior Trader For
Forex Master Method

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I am looking at the EUR/USD 1 hour chart this morning and it is making a lovely nearly perfect staircase which is going upwards. Currently there is a lot of debate around what the EURO is up to.

My system indicates that the EURO will be bearish in the next day or so, to around the first target of 1.32310. So if you find yourself into a sell trade on the EURO, you might just as well hang in there for a while. After hitting this target it will become bullish to move upward and complete another higher high in the region of 1.32936. Remember to always use your head and not your gut feel when you trade.

Till next time.

Piet Swart
Forex Profit Coach

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