In today’s Forex Forecast, Wilson Leung, Director at Trendsetter FX, gives the outlook for USD/JPY and EUR/USD.
USD/JPY: Which way will the consolidating break?
The USD/JPY pair has held the sideways consolidation for 4 weeks despite the recent economic data and Fed member speech, the disappointing US jobs data failed to break the cross lower, notes Leung.
He further says that the market is respecting the sideways patter, the lower range being 118.16 while 121.74 is capping the upside, and the cross will remain in this range in the near-term. On the outlook, he prefers adopting a buy on dips approach on the pair, suggesting to take profit towards the 121 area.
EUR/USD: 1.1087 key for downside
Leung maintains his long approach on the dollar and hence remains a seller for choice on EUR/USD, but warns of further daily choppy swings. He suggests adopting a sell approach on any move above 1.1250 on the cross and maintaining a stop near the 1.13 area. He sees downside potential in the euro on a close below 1.11 levels. Fundamentally, he notes that the single currency is biased to be lower.