USD/JPY Stuck In A Range On Quiet Trading
The euro rallied rather significantly against the Swiss franc over the last several weeks, slicing through the 200-day moving average without even hesitating. That, of course, is a very bullish sign and after an impulsive move like this one would have to think that there are plenty of people out there waiting for some type of pullback to take advantage of value.
We have clear the 200-day EMA a few days ago and have since then pulled back during two sessions that saw buyers come back in to pick up value. There was a significant amount of resistance around the 1.1350 level, extending 50 pips in each direction. That is now just about broken through and it looks as if the buyers are continuing to press to the upside. What makes this particularly interesting is just how strong the euro is in this market, considering how it has done very little against the US dollar, which is the way that most people measure of the overall strength of the currency. That being said, it shows just how soft the Swiss franc is.
Pullbacks at this point will more than likely be thought of as value the people are willing to take advantage of, especially near the 1.1350 level which currently is the place where the 200-day EMA is sitting. To the upside, the 1.15 level would make a significant resistance barrier and a very likely target. However, there’s always a possibility of an alternate scenario. In this case, a break down below the 1.13 level would not only wipe out what should be massive support but break through the 200-day EMA to send this market back down to the 1.12 level. It’s very likely if we get that move, we will also see the EUR/USD break the 1.1150 level.
The USD/JPY pair was flat on Friday and was little changed on the weekly charts. Trading activity is muted on GoodFriday/Easter holiday. The pair made some bullish attempts above the 112.00 handle earlier in the week but failed to show a sustained momentum amid the unstable risk sentiment.
The yen ignored better-than-expected Japanese CPI figures. March national consumer price index matched expectations of 0.5% increase versus 0.2% earlier, while national CPI ex-fresh food rose to 0.8% from 0.7%. The Japanese currency was also indifferent to the Bank of Japan’s routine bond market operation.
From a technical perspective, the pair needs to hold above the 111.75 intermediate support in order to regain the 112.00 level afterward. In a wider picture, the downside risks for the greenback are limited as long as the prices are holding above the 200-DMA around 111.50. On the upside, 2019 high, registered earlier this week, comes at 112.16. USD/JPY could challenge this area should risk rally resume, which is unlikely in the short term due to holiday trading.
The pair EUR/USD is still likely to fall. The estimated pivot point is at a level of 1.1324.
Main scenario: short positions will be relevant from corrections below the level of 1.1324 with a target of 1.1120 – 1.1000.
Alternative scenario: breakout and consolidation above the level of 1.1324 will allow the pair to continue the rise up to the levels of 1.1447 – 1.1515.
Analysis: Supposedly, a descending correction of senior level in the form of the wave (2) continues developing on the daily time frame with the wave C of (2) developing within. Presumably, the third wave iii of C is developing on the H4 time frame, with the ascending correction (ii) of iii finished inside. Apparently, the wave (iii) of iii of C is forming on the H1 time frame, with a local correction formed inside as the wave ii of (iii). If the presumption is correct, the pair will continue to fall to the levels 1.1120 – 1.1000. The level 1.1324 is critical in this scenario.