We have seen jitter and pessimistic tone around the world since Brexit announcement at the end of June, the decision lead pound to historical 31 years low vs USD and surely if nothing done it’ll reach the lowest level around 1.0800.
Today Abe announce stimulus package worth 265B just right before Thursday BOJ monetary decision, yen weakened by this decision. We might think Thursday BOJ rate decision will find way to weaken yen further, but what will they do? Will they cutting negative rate? Will they issue very long term bond (50 years)?
Aside from Japan, market currently is waiting for the fed to show their hand in the FOMC meeting. According to fed fund futures, only 10% expect rate increase will happen today. Flat markets expected before the announcement, but keep focusing on what Yellen say about future outlook.
EUR/USD
I have mark possible area which EUR/USD can move to, currently EUR/USD consolidating in yellow box with expansion to the green box outside of it. The range span from 1.0910 – 1.1180, getting near to the rate announcement we will see tighter range.
Today important level to watch:
Support: 1.0950, 1.0910, 1.0825
Resistance: 1.1010, 1.1100, 1.1060
GBP/USD
We are indeed threading the uncharted territory, fundamentally pound extremely weak as England will undergo major change to their economic structure (Trading partner, regulation, visitor, ban, etc), technically we need to pull out 1985 chart and draw support and resistance level.
When will pound return to bullish trend? I don’t know, it’ll depend on how the brexit actually happened and it’ll need around 2 years for England to be fully separated from EU.
For now what we can do is draw support and resistance as price form new one.
Today important level to watch:
Support: 1.3070, 1.3060, 1.3000
Resistance: 1.3280, 1.3300, 1.3330, 1.3480
USD/JPY
Positioning itself at the strong downtrend line before tomorrow BOJ monetary policy, I think something big will happen. My prediction price will follow the trend, and current trend for USD/JPY is down. But always careful, observe how price reacted to the trend line after announcement and look at the long term view of BOJ before placing any trade.
Today important level to watch:
Support: 104.6, 104
Resistance: 106.10, 107.4