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GBP/USD

Yearend Dollar View, Remains, Bullish, After, Churning, Third Quarter, Currency Analysis, fx trader, forex chart-2

GBP/USD has remained bearish in our long-term outlook for the last two years. The extremely strong and historic “Brexit Decline” in GBP/USD has produced a premature decline to the 1.3655 ongoing long-term objective for October 2016. In the process of this premature decline, the further decline through 1.3655 to 1.2795 developed complex medium-term divergences.

We are forecasting a weak retest of 1.3795 through November in the forecast subsequent broad bottoming formation and consolidation into March 2017 [1.2795 – 1.4110]. Only a monthly close back below 1.2720 would increase bearish medium-term momentum and result in a deeper decline to 1.1890 over the subsequent three months. NOTE: EURGBP decline to the .7070 long-term objective for January 2015 complete; still decline from .8360 to .7580 through January 2017 in [.7580 - .8630].

USD/JPY

Yearend Dollar View, Remains, Bullish, After, Churning, Third Quarter, Currency Analysis, fx trader, forex chart-3

The last three months’ consolidation in the third quarter without a new low slightly dampened the bearish long-term momentum and still supports our medium-term corrective outlook. After the monthly close in February 2016 below 115.55 confirmed our view of the long-term top in USD/JPY at 124.65, the strong decline again through our 107.80 May 2016 objective to 98.95 in June left medium-term the technicals waning in neutral/bearish from bearish. We continue to forecast a rally to retest only 111.45, out to January 2017 from November 2016, in the deeper, less bearish medium-term outlook through early 2017 [99.80 – 111.45]. Only a monthly close back above 116.90 in USD/JPY would neutralize the neutral/bearish outlook and revert to a more neutral medium-term outlook [110.60 – 124.65] into February 2017.

EUR/JPY

Yearend Dollar View, Remains, Bullish, After, Churning, Third Quarter, Currency Analysis, fx trader, forex chart-4

As significant a currency pair as the EUR/USD or USD/JPY, EUR/JPY will also dominate currency trading through the balance of 2016. We continue to forecast a high degree of volatility as the Dollar forms a volatile bottom against the Yen and the Dollar appreciates against the Euro. The monthly close below 125.35 forecast for May 2016 further confirmed our longer-term forecast of the decline to 111.10 through September 2016, and due to Brexit volatility, has been prematurely achieved in June. We are forecasting a subsequent rally to retest only 117.20, out to January 2017 from October 2016 in a broad, sharply lower outlook [109.55 – 121.70] into February 2017. We continue to forecast a subsequent bottom to form at 111.10 through January 2017 in a medium-term consolidation into February 2017. Only a monthly close back above 122.20 would neutralize the less bearish long-term momentum and yield a choppy medium-term consolidation [115.55 – 134.60] over the subsequent six months. 

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