Weakness on Wall St caught up with the dollar in Tokyo this morning, falling to session lows of 98.30 cents to the euro and 117.88 yen. Choppy summer trade has kept EUR/USD within a tight range and a triangle pattern showing on the weekly chart indicates both the market's indecision and a probable breakout in the near term. USD/JPY is also consolidating within the 117.00 to 120.00 range, now trading at 118.00.
Markets are awaiting the release of the preliminary Q2 GDP data for the U.S. Upward revisions in inventories and consumption could give a minor boost to the overall figure and the consensus forecast point is for an upward revision to 1.2% from the preliminary 1.1%. A much better than anticipated revision could should send equity markets and the dollar higher.
Other key data this week from the US is Friday's release of July Personal Income, July Personal Spending, final August University of Michigan Sentiment Survey, and August Chicago PMI. Data from Japan, which will be released on Friday, consist of July Unemployment Rate, July Tokyo Core CPI, July Household Spending, July Industrial Production, July Large Retailers' sales, and July Construction Orders.
EUR/USD rose to a day's high of 98.30, slightly below an overnight 1-week high of 98.35. Key support lies at 97.70 and 97.25, the 38% and 62% retracements of the 96.60 to 98.35 rally. Resistance is seen at 98.45 followed by 98.70 trendline resistance and 98.90 previous highs. A break above these levels would target parity.
USD/JPY is holding above key support at 117.75, the 62% retracement of the 116.30 to 120.30 rally. The pair is also showing a triangle pattern with a break below 117.75 targeting 117.00 trendline support. Below here would likely trigger stops and accelerate a selloff towards this year's lows of 115.45. Key resistance is seen at 120.00, trendline resistance, followed by the previous highs of 120.30.
Sterling rose to a new one week high of 1.5380, above trendline resistance at 1.5370, its previous high. Cable rebounded from a 7-week low of 1.5161 last Friday and avoided a break of key support at 1.5165, which marks the 38% retracement of the 1.4038-1.5864. Below 1.5165 would show a clear break of a head and shoulder technical formation, clearing the way for 1.4950, the 50% retracement of the same move and trendline support from 1.4080. Instead, sterling is now targeting 1.5430, the 38% retracement of the 1.5865 to 1.5160 decline. Above here would target previous support/resistance of 1.5465. //www.forexnews.com