Saturday, April 21, 2018
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Market Morning Briefing: Euro Yen Is Respecting Resistance In The Downward Channel
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FOREX

As per our expectation, Dollar index (90.34, high of 90.59 yesterday), after having breached resistance in the downward channel (daily candles) earlier this week, has moved further up possibly targeting higher resistance (90.75-91.00 – seen on daily line chart, weekly line chart and 3 day candles). 90.75-91.00 is seen as a strong resistance level. If breached, it could lead to medium term bullishness for the Dollar.

As we had been expecting, Euro (1.2256) did test lower support on daily candles (near 1.2225) by dropping to a low of 1.2218 yesterday and is currently trading slightly above support. The 21 weeks moving average line is at 1.2150 currently and if it breaks, it could be termed as a decisive bearish turn for the Euro in the medium term. However, while above 1.2150, Euro could again move back up towards 1.25 – thereby continuing its broad ranging between 1.255-1.215 since Jan end.

Dollar Yen (107.20) has decisively breached resistance near 106.9 in the downward channel on daily, 3 day and weekly candles. Could this be an indicator of medium term bullishness? If Dollar Yen moves beyond its previous high of 107.90 (seen in Feb end), a medium term bullish view could take preference.

Euro Yen (131.37) is respecting resistance in the downward channel on 3 day and weekly candles near 131.4-131.5 and might come down from here towards 130. However, there is possibility for the Euro to rise from current support and Dollar Yen to rise towards 107.90 – if that happens, then the downward channel for Euro Yen would be breached. If we reverse the hypothesis, could resistance on Euro Yen imply that both Euro and Dollar Yen will dip further? We should get to know this in the next week.

Pound (1.4015) has broken interim support trendline on daily candles and as per our expectation has moved lower, possibly targeting important support level near 1.395 on daily and 3 day candles.

Dollar Rupee (64.96) – Dollar-Rupee could lean towards the downside, especially if it closes below 64.90 today.

INTEREST RATES

US long term yields had bounced yesterday from supports on short term charts towards channel resistances and might see a dip from there next week again. The US CPI data release next week (11th April) could be important for yields. We have been saying that US yields could continue moving in a downward channel through Apr-May.

US 10 Yr Yield (2.82%), 30 Yr (3.06%), 5 Yr (2.62%), 2 Yr (2.29%) :

The 10 Year yield had risen from support near 2.75% on the short term chart to 2.80% yesterday and is currently near 2.82%. It could move up further towards 2.85%-2.86%, which could be a resistance level in the downward channel.

The 30 yr yield instead of dipping from resistance near 3.05% has moved up further towards 3.06%. It could see a dip soon, back into the channel, or else it could move up towards 3.10%-3.12% and dip from there.

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