Daily Currency Outlook: GPB/JPY And EUR/JPY

Daily Pivots: (S1) 121.32; (P) 122.16; (R1) 123.49;

GBP/JPY rebounded strongly from 120.82 but it's kept inside near term falling channel as well as below 123.79 resistance. Fall from 125.82 is still in favor to continue lower. Below 120.82 will turn bias back to the downside for retesting 118.82 low. Break will resume whole fall from 133.48 and target 116.83/117.29 support zone. Nonetheless, break of 123.79 will dampen this bearish view and turn focus back to 125.82 resistance instead.

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 neither. The development argues that even though there is no clear sign of 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.

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EUR/JPY Daily Outlook

Daily Pivots: (S1) 95.00; (P) 95.71; (R1) 96.76;

EUR/JPY's rebound from 94.11 temporary low extended further to as high as 96.50 but after all, it's still kept below 97.37 resistance. Thus, near term outlook remains bearish and another decline is still expected. Break of 94.11 will target 94.11 will target 61.8% projection of 111.43 to 95.64 from 101.62 at 91.86 next. Though, we'd be cautious on bottoming signal as it approaches 90 psychological level. Meanwhile, break of 97.37 will argue that EUR/JPY might have already bottomed and would turn focus back to 101.62 resistance instead.

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 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.

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