Japanese Intervention Plan Getting No Support from Central Banks

The USD JPY hit a key 50% price at 80.40 as forecast,triggering some light profit-taking. Although traders anticipate another roundof intervention, there has been no notable central bank activity at this time.This could mean that aggressive traders will continue to push the Dollar/Yenlower into the next retracement level at 80.04.

The USD JPY hit a key 50% price at 80.40 as forecast,triggering some light profit-taking. Although traders anticipate another roundof intervention, there has been no notable central bank activity at this time.This could mean that aggressive traders will continue to push the Dollar/Yenlower into the next retracement level at 80.04.

The 50% correction of the “Intervention Rally” in less thana week proves that the Bank of Japan and Japanese officials will have to workharder to weaken the Japanese Yen. I warned before the intervention that theyseldom work without the cooperation of other central banks. The Fed’s stronghint at further stimulus was a sign that it was not on the same page as the BoJsince its poor assessment of the U.S. economy was bad of the Dollar.

Whether the Fed is deliberately weakening the U.S. Dollarcan be debated, the bottom-line is, Japancan cry all it wants about the strong Yen weakening its economy, but the Fed isnot concerned because the U.S.economy has problems of its own.

After hovering on both sides of an uptrending Gann angle at.9570 on Wednesday, the Aussie Dollar finally succumbed to selling pressure,triggering a break from its high and putting it in a position to form a dailyclosing price reversal top.

A late session comeback, however, helped the Aussie avoidforming the bearish topping pattern. The intraday action does suggest, however,that the selling may be greater than the buying at its current price level.

Weakness in U.S.equity markets was to blame for today’s break in the AUD USD. Once it becameclear that the stock market did not have enough buying power to regainTuesday’s high, demand for higher risk assets fell, triggering a profit-takingbreak in the Australian Dollar.

Although the Australian economy is much stronger than the U.S. economy at this time and its central bankhas been raising interest rates while the Fed is likely to begin another roundof stimulus, investors are concerned that the faltering U.S. economy may derail the entireglobal recovery. This concern is encouraging bullish Aussie Dollar traders totake a little off the top while traders reassess their risk parameters.

A strong overnight rally triggered a sharp move to theupside, putting the GBP USD in position to challenge a key resistance clusterat 1.5728 to 1.5736. The Sterlingbacked-off early in the session at 1.5714 before settling into a range.

Early this morning the Bank of England minutes stated that the central bankmembers were concerned about a slow-down in the economy and were open to freshstimulus measures. This news may have helped limit gains in the British Poundtoday.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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