USD & Yen Hit Hard on Heavy Risk Related Buying (Midday Snapshot)

MIDDAY SNAPSHOT & ANALYSIS OF SELECTED RATES

Safe haven currencies have been hit hard in Wednesday trade with both the USD and Yen pulling back sharply across the board on the back of some improved sentiment aided by better earnings releases in the financial sector and stronger than expected empire manufacturing and industrial production numbers. The commodity currencies have outperformed on the day with Kiwi taking top honors, while Aussie trades just below. Any downbeat comments from EU Barosso and ECB Constancio have also failed to materially weigh on the Euro, with the market clearing key stops above 1.4075 early on to trade back above 1.4100. Barosso said that the Euro would be exposed to weakness if an economic recovery plan were to fail, while Constancio warned that economic uncertainty remained high despite signs of stabilization. Treasury Secretary Geithner's reiteration of a strong USD policy was also non-influential. US equities trade sharply higher led by the NASDAQ up some 2.80%, while commodities are also bid, led by oil which trades back above $61. Looking ahead, all eyes are focused on the release of the Fed Minutes at 18:00GMT.

ANALYSIS OF SELECTED RATES



Gbp/Jpy: With a current daily low of 152.40, the daily ATR (Average True Range) projects a potential daily high today back towards the 20-Day SMA at 155.40. We are not inclined to enter any positions at current levels but will be more than happy to establish a short position should the market rally to test the 20-Day SMA on Wednesday. Major bull channel support off of the 2009 multi-year lows was broken in the previous week and any rallies are now seen limited to the former channel support now turned resistance which also coincides with the 20-Day SMA, ahead of an eventual resumption of declines back below the 100-Day SMA which has managed to successfully prop setbacks for now. Weekly studies are also quite bearish and we look for a lower top to carve out below 157.15, ideally by the 20-Day SMA and former channel support ahead of the next major drop. Strategy: SELL @155.30 FOR AN OPEN OBJECTIVE, STOP @157.30.  RECOMMENDATION TO BE REMOVED IF NOT TRIGGERED BY NY CLOSE (5PM ET) ON WEDNESDAY. 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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