Daily Forex Preview - 12/11

12 November, 2014

Yesterday’s trading session was quiet with lack of fundamentals and the North American session closed on account of Veteran’s day. However, the Yen pairs were the news makers as the currency weakened considerably on rumors of Japanese Premier Shinzo Abe calling for snap elections in December and speculation of a delay to the proposed sales tax hike according to news reports from a local news outlet.

The Yen turned around this morning as Japan’s Chief Cabinet Minister Yoshihide Suga said that they were not preparing for any elections and neither was there any proposal to delay the sales tax hike.

Late last night, the RBNZ released its financial stability report. The Kiwi Dollar managed to strengthen as the report served to remind that markets of the tightening cycle and that the RBNZ was prepared to raise interest rates when necessary. Governor Wheeler however did mention that the Kiwi dollar was unjustifiably high and future declines will be based on significant appreciation of the US Dollar.

Fundamentals Recap – November 11, 2014

  • Australia NAB business confidence at 4, down from 5 the previous month
  • Australia HPI q/q 1.5% vs. 1.6% estimates
  • Japan consumer confidence declines to 38.9; Economy watchers sentiment 44 vs. 49.2
  • RBNZ Financial stability report and speech by RBNZ Governor Wheeler

Fundamentals – November 12 2014

  • Australia Westpac consumer confidence rises 1.9% vs. 0.9% previously
  • Australia quarterly wage price index 0.6%, in line with estimates
  • UK Average earnings index 3m/y expected to rise 0.9%, unemployment rate expected to improve to 5.9%
  • Eurozone industrial production m/m to rise 0.7%, industrial production y/y to decline -0.2%
  • BoE Inflation report hearing and speech by Mark Carney
  • US wholesale inventories to be soft at 0.2%

EURUSD Daily Pivots

R3

1.2621

R2

1.2559

R1

1.2516

Pivot

1.2454

S1

1.2411

S2

1.235

S3

1.2307

EURUSD managed to close higher in a turnaround towards the US session, forming a higher low. The pair now trades as a critical level as seen from the above charts, in what looks to be shaping out to be a falling wedge pattern with a potential to the upside. However, resistance near 1.2527 needs to be cleared to aim for further upside gains. Alternatively, a close below the daily support level 1 at 1.2411 is required for the EURUSD to position itself for more declines.

USDJPY Daily Pivots

R3

117.844

R2

116.974

R1

116.377

Pivot

115.507

S1

114.906

S2

114.040

S3

113.433

While the Yen weakened yesterday’s today’s news seems to have breathed some life in the Yen. In the above chart, we notice the minor trend line being broken and retested which if validated by a close below today’s pivot could see USDJPY decline towards the daily support 1 level at 114.91. The risks however come from the fact that the latest price action is forming a bullish flag pattern, which itself could be invalidated on a decline to 114.91. Alternatively, a rally above 115.9 region could see further upside gains on the cards for USDJPY.

GBPUSD Daily Pivots

R3

1.6073

R2

1.6008

R1

1.5962

Pivot

1.5899

S1

1.5853

S2

1.5788

S3

1.5742

GBPUSD’s price action is somewhat akin to that of the EURUSD but with the key risks coming from today’s unemployment data and the BoE inflation hearing. Key resistance at 1.6 levels will have to be cleared for any possibility of further upside gains, while a close below the daily support level 1 at 1.5835 is essential to pave way for declines towards the target of 1.574.

Guest post by Orbex

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