Technical Outlook for Euro ,Yen ,Sterling – -Umesh Shanmugam

 Euro: After spending most of the month below the technically important $1.28 area, the euro jumped back above last week. A rounded bottom has been carved out and the $1.2840 area should now offer support. On the upside, the next test of the bulls’ resolve will be in the $1.3000-30 area. The potential downtrend drawn off the mid-Sept and mid-Oct highs comes in near $1.31 by the end of the month. Technical indicators, like RSI and MACDs, are constructive and the 5-day moving average crossed above the 20-day average at the end of last week, suggesting short-term models and momentum traders are getting positive signals.

Constructive technical outlook.
Yen: Japan’s macro-economic conditions, like the contracting economy, large, even if not heavy, debt burden, and deteriorating external accounts, offer textbook fundamental reasons not to like the yen. However, it took the threat of significant currency debasement by the man expected to become the next prime minister to spur the yen’s slide. The adjustment does not appear over, even if the recent pace, a 3.6% slide since November 13 is not sustained. Dollar support is seen near JPY81.60-80. On the upside, there has been reports of good demand for JPY83 and JPY84 strikes. This year’s high, thus far, was set in March near JPY84.18. Last year’s high was recorded in April near JPY85.50. Demand for euros against the yen may have helped begun the euro rally. The euro is poised to move toward the JPY111 area.
Negative technical outlook for the yen.
Sterling: While it has lagged behind the euro, sterling has also gained against the greenback. However, unlike the euro, sterling closed only once below the 200-day moving average, where the euro spent most of the month below it. Sterling’s 5-day moving average has not crossed above the 20-day average, it likely will in the week ahead. Momentum and MACD indicators are constructive. The next technical hurdle is seen near $1.6050 and when it is overcome, it could spur another cent or so advance. Initial support is seen near $1.5960 and then $1.5920.
Constructive technical outlook for sterling.