Daily Currency Outlook

Daily Pivots: (S1) 121.56; (P) 122.80; (R1) 123.57;

Intraday bias in GBP/JPY remains on the downside for the moment. As noted before, rebound from 118.81 should have completed at 125.82 after failing 55 days EMA. Deeper fall should now be seen to retest 118.82 low first. On the upside, though, above 124.04 minor resistance will mix up the near term outlook and turn bias neutral again.

In the bigger picture, there was so far no impulsive upside move after GBP/JPY formed a medium-term bottom at 116.83. On the other hand, there was no sustainable selling either. The development argues that even though there is no clear sign of a trend reversal in GBP/JPY, it's more likely engaging in sideway consolidations, which corrects fall from 163.05. That is, we'd probably see more range trading between 116.83 and 140.02 (50% retracement of 163.05 to 116.83 at 139.94) ahead, before an eventual downside breakout.



EUR/JPY Daily Outlook

Daily Pivots: (S1) 96.18; (P) 97.02; (R1) 97.63;

With 97.88 minor resistance intact, intraday bias in EUR/JPY remains on the downside for 95.64 support first. Break will resume the whole decline from 114.43 and should target 61.8% projection of 111.43 to 95.64 from 101.62 at 91.86. On the upside, above 97.88, minor resistance will turn bias neutral and bring consolidations before staging another fall.

In the bigger picture, with 111.43 resistance intact, the down trend from 2008 high of 169.96 is still in progress and could extend further lower to 90 psychological level. However, as we're favoring the case that pattern from 139.21 is a falling wedge with bullish convergence condition in weekly MACD. Fall from 111.43 should be the last leg in such a pattern. Hence, we'll expect strong support above 88.96 to contain downside, form a major bottom and bring reversal. So, focus will be on reversal signal in case of another decline. Meanwhile, break of 104.61 will be the first signal of reversal while further break of 111.43 should confirm.