GBPJPY – On the Verge of Breakdown?

GBPJPY – On the Verge of Breakdown?

Chart Of The Day Uncategorized

Ever since Boris Johnson opened his mouth and suggested that Article 50 was coming sooner rather than later, cable has been under a relentless selling assault. This week there is little meaningful data on the UK docket, but the damage from rhetoric has been done. The pound has been a sell every rally trade and we see nothing in the immediate horizon that would change that dynamic.

Meanwhile, USD/JPY has been under selling assault as well as shorts focus on the the key 100.00 barrier and risk aversion flows make the pair vulnerable to breaching that level. Which is the GBP/JPY cross remains the strongest momentum sell trade in the currency market. The pair is now perched near the key 130.00 support level, but a break below could open a slew of stop runs and ultimately the pair could see 125.00 as selling from both side continues unabated.

AUD/JPY – False Breakdown or 75.00 in View?

AUD/JPY – False Breakdown or 75.00 in View?

Chart Of The Day

AUD/JPY has been pushed and pulled by risk on/risk off flows as the Brexit vote comes to fruition. The pair broke the key 77.50 support level as yen flows post BOJ and fears of Brexit helped drive the pair lower.

But with Remain vote now looking like it may squeak out a win global equity markets have breathed a sign of relief and the pair has managed to rally back to 77.50. However former support usually becomes current resistance and AUD/JPY has struggled to push much beyond that level today.

A slew of new Brexit polls along with RBA minutes are scheduled to be on the docket tonight and they could provide another boost to risk flows in Asia trade, but if the news shows a rebound in Leave fortunes then AUD/JPY could quickly sink to 75.00

EUR/AUD – Double Top Breakdown

EUR/AUD – Double Top Breakdown

Chart Of The Day

EUR/AUD – Double Top Breakdown

One of the worst performing currencies today was EUR/AUD. Between the decline in the euro and the surge in the Australian dollar, the pair dropped to its lowest level in 2 months. Australian economic data has been very good and the RBA appears unconcerned about the problems in the economy. In contrast, ECB officials have taken every opportunity to signal plans to ease monetary policy. While there are a few more pieces of Australian data scheduled for release this week, we believe that the “next move” for EUR/AUD will be driven by the euro and not the Australian dollar. Either way, EUR/AUD appears prime for a test of 1.4800 and likely a move to 1.4600. More easing by the ECB will only make Australia’s 2% yield more attractive.

Technically today’s move represents a clear break of the double top formation in EUR/AUD. The currency pair has fallen hard in the past 24 hours, breaking below the 200-day SMA. There is no support in the pair until 1.48 and if that is broken then 1.46. A move back above 1.5250 would be needed to negate the downtrend.

EUR/GBP – Triple Bottom or Breakdown?

EUR/GBP – Triple Bottom or Breakdown?

Chart Of The Day

Fundamentals

The EUR/GBP pair now finds itself at a critical juncture. The ECB is in the midst of battling creeping deflation and has threatened to use QE if economic conditions in the EZ decelerate further. Tonight’s EZ PMI reports which provide the most recent reading of conditions on the ground could be key to their decision making process. If the news disappoints the ECB many have no choice but to initiate some sort of easing program – a move that could push euro lower. Meanwhile the UK economy continues to perform well and the country is enjoying the best growth of anyone in the G-7 universe. That has led many traders to conclude that the BoE will be the first major central bank to hike rates and the pound has rallied to trade near yearly highs as a result. If this dynamic continues EUR/GBP which has strong support at .8150 level could breakdown and head towards the 8000 mark as the summer progresses.

Technicals

Technically EUR/GBP enjoys triple bottom support at the 8150 level and further support at 8100, but a break through those levels opens up the prospect of a move towards the key 8000 figure, while only a move above 8250 relives the downside bias.

EURUSD –Support or Breakdown? Forex Daily Tech06.26.13

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