Talking Points:
- USD/JPY Weakness to Persist on Wait-and-See Kuroda; RSI Trigger in Focus.
- NZD/USD to Eye Top of Range on Strong New Zealand Employment Report.
- USDOLLAR to Face Fed Rhetoric, Slowing ISM Non-Manufacturing Survey.
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Chart - Created Using FXCM Marketscope 2.0
- Despite the surprise move by the Bank of Japan (BoJ), the near-term pullback in USD/JPY may gather pace over the coming days should the Relative Strength Index (RSI) fail to preserve the bullish formation carried over from the previous month; break/close below 120.10 (61.8% retracement) to 120.20 (50% expansion) may open up the next key downside hurdle around 119.00 (161.8% expansion) to 119.10 (38.2% expansion).
- Even though the BoJ continues to push monetary policy into uncharted territory, the fresh comments from Governor Haruhiko Kuroda may ultimately spur a larger pullback in the dollar-yen should the central bank head endorse a wait-and-see approach after implementing negative interest rates in January.
- The DailyFX Speculative Sentiment Index (SSI) shows retail crowd has flipped back to net-long USD/JPY on January 29, with the ratio working its way back towards recent extremes as it climbs to 1.40 (58% of traders are long).
NZD/USD
- Despite the 10.4% decline in Whole Milk Powder prices at the Global Dairy Trade auction, NZD/USD looks poised to retain the range-bound price action going into New Zealand’s 4Q Employment report; may see a bullish reaction as the region is anticipated to mark a 0.8% rebound in job growth.
- Even though the Reserve Bank of New Zealand (RBNZ) keeps the door open to further reduce the benchmark interest rate, fresh comments from Governor Graeme Wheeler may continue to produce range-bound prices should the central bank head endorse a wait-and-see approach.
- Will keep a close eye on the near-term range amid the failed attempt to close above 0.6570 (100% expansion) to 0.6590 (38.2% retracement), with support coming in around 0.6370 (50% retracement) to 0.6400 (61.8% retracement).
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USDOLLAR(Ticker: USDollar):
| Index | Last | High | Low | Daily Change (%) | Daily Range (% of ATR) |
|---|---|---|---|---|---|
| DJ-FXCM Dollar Index | 12237.57 | 12255.1 | 12224.5 | 0.04 | 73.74% |
Chart - Created Using FXCM Marketscope 2.0
- The USDOLLAR may continue to face range-bound prices ahead of the highly anticipated U.S. Non-Farm Payrolls (NFP) report as the ISM Non-Manufacturing survey is anticipated to show a slower expansion in service-based activity; will keep a close eye on the employment component to see how NFP expectations develop.
- With Kansas City Fed President Esther George and Cleveland Fed President Loretta Mester, both 2016-voting members on the Federal Open Market Committee (FOMC), scheduled to speak over the coming days, the fresh comments may impact the near-term outlook for the greenback as market participants gauge the timing of the next rate-hike.
- Will continue to watch the range-bound price action as the USDOLLAR remains capped around 12,273 (161.8% expansion) to 12,296 (100% expansion), with former resistance around 12,176 (78.6% expansion) to 12,219 (November high) offering new support.
Read More:
Silver and Platinum Price Action Not Supporting Gold Fervor
USD/CAD Technical Analysis: CAD Bulls Likely In Charge below 1.4325 (Levels)
COT-Big Increase in Net Long Position for Crude Oil Trend Followers
USD/JPY-Don’t Forget about the 26 Year Trendline
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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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