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GBP/JPY Rebounds from Former Resistance- USD Carving Lower High?

GBP/JPY Rebounds from Former Resistance- USD Carving Lower High?

2014-07-08 18:05:00
David Song, Currency Strategist
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Talking Points:

- USDOLLAR Risks Lower-Low as Monthly Opening Range Takes Shape

- NZD/USD Climbs to Fresh Monthly High as Fitch Upgrades Outlook

- Bullish GBP/JPY Outlook Favored as Former Resistance Acts as New Support

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10409.4

10425.34

10405.77

-0.14

66.88%

USDOLLAR(Ticker: USDollar):

  • Dow Jones-FXCM U.S. Dollar Index appears to have carved another lower-high in July as it fails to push back above former support around 10,440 (78.6% Fibonacci retracement) & retains descending channel.
  • Relative Strength Index (RSI) started to look constructive, but a failure to push back above 50 raises risk for a further decline.
  • 10,406 (1.618% Fibonacci expansion from the August decline) appears to be acting as soft support; Federal Open Market Committee (FOMC) Minutes may set the tone for the rest of the month.
  • May continue to see lower highs & lows should we get more of the same from the Fed policy statement.

NZD/USD:

  • Spiked into a fresh monthly high of 0.8804 as Fitch raised New Zealand’s credit rating outlook to ‘positive’ from ‘stable.’
  • Appears to be carving higher-low as it bounces off of trendline support; would like to see a close above 0.8800 to favor a further advance in NZD/USD.
  • Next topside objective comes in around 0.8850 (61.8% Fib expansion from February)
  • China Consumer Price Index (CPI) may generate a bearish reaction in the New Zealand dollar as headline reading for inflation is expected to cool to an annualized 2.4% from 2.5% in May.

GBP/JPY:

  • Bullish outlook favored for GBP/JPY as it breaks out of consolidation phase; upward trending channel in focus.
  • Looks like former resistance around 173.60-80 is offering support ahead of Bank of England (BoE) meeting..
  • Will look for opportunities to ‘buy dips’ as the bullish breakout gathers pace; break above 175.30-40 to expose 177.40/50 (100% Fib expansion).

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GBP/JPY Rebounds from Former Resistance- USD Carving Lower High?

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Read More:

EURUSD July Opening Range Play- Shorts Favored Sub 1.37

Short-term Reversals Develop in GBP-crosses - Sell Highs or Buy Dips?

USDOLLAR Daily

GBP/JPY Rebounds from Former Resistance- USD Carving Lower High?

Chart - Created Using FXCM Marketscope 2.0

  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,354 to 10,375 (50.0 retracement)

Release

GMT

Expected

Actual

NFIB Small Business Optimism (JUN)

11:30

97.0

95.0

Fed's Jeffrey Lacker Speaks on U.S. Economy

17:00

Fed's Narayana Kocherlakota Speaks on Monetary Policy

17:45

Consumer Credit (MAY)

19:00

$20.000B

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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