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USD/JPY is working on breaking down out of a triangle on the daily, putting the near-term path of least resistance down. Euro crosses still look vulnerable to more selling, but we have shifted focus towards sterling crosses for now. Gold holding strong.

Highlights:

  • USD/JPY breaking down out of triangle, path of least resistance firmly lower
  • Euro crosses were a focus last week, looking lower; but GBP crosses (GBP/AUD in particular) now more attractive shorts
  • Gold is holding onto its recent surge, with support at hand it could stay firm and start moving higher again

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USD/JPY is trading sharply lower today, soundly below the underside of a triangle we looked at last week. This has the path of least resistance pointed firmly lower. The first level up as support clocks in just under 11100, then the trend-line off the September 2016 swing-low.

USD/JPY: Daily

usd/jpy daily price chart

EUR/USD at the time we looked at this morning was still looking lower, but has since rallied sharply. It may still be vulnerable, but the outlook has firmed up just like that. GBP/USD has a trend-line off the November low we’re keeping an eye on as support. We also looked at AUD/USD & NZD/USD. (If you’re looking for a longer-term view on major currencies, check out our Q1 Forecasts.)

Turning to the cross-rates, last week we were focused on several euro-crosses (EUR/AUD, EUR/NZD & EUR/CAD & EUR/JPY). EUR/JPY is faltering back inside the 3-month range it broke free from at the end of last month. The failure, as long as price stays below 13450, has our eyes on the low-end of that range under 13200, or worse (extended ranges which demonstrate false breakouts can lead to powerful moves). Euro crosses look generally vulnerable still, but we are looking to GBP-crosses as having potentially better downside from here. The set-up we looked at in detail, was in GBP/AUD. A descending wedge is in progress and upon a 4-hr closing bar below the pattern the targeted objective becomes a pair of swing-lows in November at 17043 and 16895. GBP/JPY is the in a similar boat at EUR/JPY and has risk of a decline down to 14940/800.

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GBP/AUD: 4-hr

GBP/AUD 4-hr price chart

The last thing on the watch list we looked at was precious metals. Gold is doing a good job of holding onto support at 1305 (former resistance). A trend-line from Sep 2013 lies near 1340, with price resistance clocking in near 1360. Silver has good support below at the 200-day at 16.90, which is in alignment with a steep trend-line off the December low. It will need to clear into the 17.40s, though, before momentum can pick up.

Gold: Daily

Gold daily price chart

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---Written by Paul Robinson, Market Analyst

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