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USD/JPY

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex usdjpy

In last quarter’s FX Trader Magazine article, we were focused on waning bearish medium-term momentum from the decline through the 107.80 objective for May 2016 to 99.00, as well as an imminent corrective rally. The strong rally through the 111.45 corrective objective for January 2017 as well as the November monthly close above 114.20 increased bullish medium-term momentum and techs. We are forecasting a further rally to 121.40 through February 2017 in the broad, volatile, and bullish outlook through the first quarter of 2017 [114.20 – 121.40]. We are forecasting a continuation of this consolidation view [114.20 – 121.40] through September 2017. Only a monthly close back below 114.15 would neutralize the bullish medium-term momentum and result in a decline to retest 108.80 over the subsequent month

EUR/JPY

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex eurjpy

As stated in the last couple of articles, as significant a currency pair as the EUR/USD or USD/JPY, EUR/JPY will continue to dominate currency trading through the first quarter of 2017. The premature decline in October 2016 to the 111.10 medium-term objective for November produced very strong multiple medium-term divergences, we are forecasting a further rally to 126.30 through February in a waning bullish outlook [116.90 – 126.30] into May 2017. We are forecasting a retest of 118.80 into June 2017, still in this choppy medium-term consolidation [116.90 – 126.30] into September 2017. Only a monthly close back below 116.90 would neutralize the waning bullish momentum and yield a retest of 111.10 over the subsequent two months.

USD/CHF

Final Leg, Dollar, Bull, Market, Currency Analysis, fx  trader, forex usdchf

I am compelled each quarter to emphasize that the Swiss Franc remains the bellwether, proactive currency. The third quarter consolidation and cross rate rotation combine in this currency. Every time the USD/CHF appeared to break out to the upside, EUR/CHF would decline, thus dampening any bullish momentum back to neutral. Each time the USD/CHF would break out to the downside, EUR/CHF would rally to its high and again neutralize any bearish momentum in USD/CHF. As a result, the USD/CHF remained neutral.

In the fourth quarter, though, we resumed the USD/CHF rally toward our 1.0440 January 2017 objective. As we tested 1.0330 about 1% from the objective, EUR/CHF has declined toward the 1.0625 medium-term pivot point and dampened the bullish medium-term techs in USD/CHF.  We continue to forecast the rally to 1.0440 through January 2017, but also continue to forecast the decline in EUR/CHF to 1.0235 in January 2017. This 4% decline in EUR/CHF will continue to constrain USD/CHF and produce significant medium-term divergences through March 2017.

So, since we continue to forecast approximately another 10% decline in the EUR/USD, somethings got to give in the CHF. We are focused on a weekly close in EUR/CHF below 1.0625 to commence the forecast decline to 1.0235 and maintain our complex CHF outlook.

NOTE: In our big picture, the struggle of USD/CHF and resulting medium-term divergences [as the EUR/USD completes its seven-year cyclical decline at .9330] is also a strong indication of the waning long-term bull market in the Dollar that we now believe culminates into the middle of 2017.

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