USD/JPY Sits during Channel Support; RSI Hovers Above Oversold Territory

Talking Points:

USD/JPY Sits during Channel Support; RSI Hovers Above Oversold Territory.

GBP/USD Struggles to Test 2017 High Ahead of ‘Brexit’ Trigger, U.K. Mortgage Applications.

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USD/JPY Daily

USD/JPY Daily Chart

Chart – Created Using Trading View

  • The near-term opinion for USD/JPY stays slanted to a downside as a span extends a array of lower-highs from progressing this month; a new strength in a Japanese Yen has been mostly accompanied by a decline in risk sentiment, with a Nikkei (JPN225) sitting nearby a monthly low (18,867) streamer into Japan’s 2016 mercantile year-end.
  • However, a Relative Strength Index (RSI) might prominence a near-term depletion as it continues to float above 30 and struggles to pull into oversold territory; a spin in a movement indicator might foreshadow a miscarry in a sell rate.
  • With Fed Chair Janet Yellen scheduled to pronounce after today, a uninformed comments might lean a USD/JPY sell rate as officials continue to plan 3 to 4 rate-hikes for 2017, and a greenback might trade on a firmer balance should a executive bank conduct uncover a larger eagerness to lift a benchmark seductiveness rate progressing rather than later.
  • Nevertheless, seductiveness rate expectations have narrowed given a March meeting, with Fed Fund Futures now pricing a reduction than 50% luck for a Jun rate-hike, and a new developments in a sell rate might prove a broader change in marketplace function as Fed officials continue to plan a depot fed supports rate tighten to 3.00%.
  • In turn, a break/closes subsequent a Fibonacci overlie around 109.40 (50% retracement) to 109.90 (78.6% expansion) opens adult a subsequent segment of seductiveness around 108.30 (61.8% retracement) to 108.40 (100% expansion); would also like to see a RSI symbol a initial oversold reading given Jun for confirmation/conviction.

GBP/USD Daily

GBP/USD Daily Chart

Chart – Created Using Trading View

  • GBP/USD appears to have done a unsuccessful run during a 2017 high (1.2706), with a British Pound during risk of confronting serve waste over a subsequent 24-hours of trade as a U.K. starts a routine of vacating from a European Union (EU); a pulls behind from trendline insurgency might open adult a operation from progressing this year generally as U.K. Mortgage Approvals are approaching to downtick in February.
  • Nevertheless, a Bank of England (BoE) looks staid to keep a stream routine during a subsequent assembly on May 11 as Governor Mark Carney and Co. steadfastly advise ‘there are boundary to a border that above-target acceleration can be tolerated,’ and a executive bank might make serve attempts to buy some-more time as Prime Minister Theresa May starts a traffic process.
  • Failure to exam a Fibonacci overlie around 1.2630 (38.2% expansion) to 1.2680 (50% retracement) shifts a near-term outlook, with a break/close subsequent 1.2460 (61.8% expansion) to 1.2490 (38.2% retracement) opening adult a subsequent downside jump around 1.2370 (50% retracement) followed by 1.2270 (23.6% retracement).

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— Written by David Song, Currency Analyst

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