EURJPY tested the upper bounds of its current 4-day trading range on Tuesday, as the other carry pairs and majors bided their time in sideways price action ahead of Wednesday's FOMC decision. EURJPY remains below both Friday's high and the 1-month trend-line on the daily chart. While the short-term trend remains lower for this pair, the FOMC results could spark a move above resistance to test the 160 level. While the trends on the shorter-term time frames remain higher, the intermediate-term trend on the daily chart remains lower.
USDJPY held Monday's rally and looks ready to give a serious challenge to the current resistance line on the daily chart drawn from the 12/28 high to last Friday's high. Market participants point to the recent rally in Yen as being more technical than fundamental, due to the unwinding of the carry trade brought about by equity losses. However, the trend is still up, albeit looking ripe for a correction, with the potential impetus being tomorrow's FOMC decision. A sell off in Yen â€“ the equivalent of rally in USDJPY -- would be welcome by the BOJ also, which remains slow to give up its weak Yen policy.
EUR held Monday's gains despite a stronger than expected U.S. Durable Goods number. The short-term trend on the daily EUR chart is now arguably higher, from its previous sideways stance, and pointed toward a move on 150, which is the high of this bull market to-date. EUR is still trading just below 148.00. Sentiment that the ECB will likely cut rates is dissipating, and even if it does cut rates, it will likely be less than European exporters are hoping for, which supports the continued bull thesis.
GBP is pointing toward a break out above its bear trend line and a move on 200.00, but it would take a larger rally than that to break the intermediate and long-term bear grip on this market.
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