FX Monthly (Apr ’16)

USD/JPY is breaking lower following consolidation, with prices now pressuring the 110.25, (61.8%) retracement of the 2014-2015 rally and psychological 110.00 level.

A close beneath here is looked for, as momentum studies and the Tension Indicator continue to fall, with the 106.75, (38.2%) retracement of the 2011-2015 rally to then attract. There is scope for still deeper reactions, however, as longer-term background studies also fall.

Resistance into limited gains is up to congestion around 113.00, but any test and break is expected to prove difficult to sustain as investors maintain a sell-into-strength strategy. A close above 115.00/55 is needed to stabilise prices and turn sentiment neutral.

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