After losing heat yesterday, majors seem to be recovering some of its losses as markets are currently trading near intraday highs. The Asian session seems quite calm yet the day ahead of us is filled with major market movers starting with the BoE Minutes to trade balance in the Euro Zone and finally inflation data from the US. Trading may witness slight fluctuations today.
The Euro versus Dollar pair after confirming the breach of the neckline for the head and shoulders pattern at the 61.8% correction at 1.3850, it failed to maintain lower levels as it is currently trading at 1.3870 affected by the inverted hammer seen on the daily charts. Momentum indicators are supporting the slight upside movements for today on the daily and intraday basis yet we believe the pair is to target 1.3930 before reversing back to the downside to complete the technical targets for the pattern near 1.3370. Note that the downside movements remain valid as far as 1.4340 remains intact.
Concerning the Cable, after declining yesterday to as low as 1.6205, the pair rallied back to the upside to record a high of 1.6507 yet failed to close above the 38.2% correction for the last decline at 1.6420. Today trading started the session to the upside as it currently retests the above mentioned correction yet technical indicators are still showing the possibility for further downside movements to break the neckline of the double top formation at 1.5940 on the short term. The pair needs to attempt enough bearish momentum first to breach the lower line of the pitchfork channel to open the way to target the neckline. Technical targets for the pattern reside at 1.5210 where the downside movements remain as far as trading maintains levels below 1.6660.
After declining to the 38.2% correction at 96.10, the USD/JPY pair rebounded back to the upside as it trades near the intraday high at 96.70. On the four hour charts we see a bullish engulfing pattern which suggests the pair to incline towards 97.25 as an initial target where a break of which will open the way for the pair towards 97.60 and 98.10. Supporting our outlook to the upside for today is the need to relieve momentum indicators on the daily charts in an attempt to gather bearish momentum to reverse back to the downside. The short and medium term trends are to the downside as far as 99.60 and 101.50 remain intact with targets at 92.50. Note that to reach this target; the pair needs to breach the 96.10 and 95.75 support levels which are the 38.2% correction for the decline from 100.60 and the 23.6% correction for the decline from 124.10 respectively.