Sterling surges while yen continues to struggle

The British pound is the top performing currency against a weaker dollar in early U.S. trade with an advance of more than a full point on the session. Economic data out of the United Kingdom helped support the sterling’s advance with the Q4 exports, imports and private sector consumption all topping consensus estimates. The pound has now broken above key resistance at 1.5760 with topside resistance targets at 1.5860, the 100% Fibonacci extension taken from the Feb. 14 and 22 troughs at 1.5880 and the 1.59-handle. Interim support rests at the 78.6% extension at 1.5833, the 61.8% extension at 1.5795 and 1.5765. Our medium-term bias for the pound remains weighted to the topside here, noting pullbacks into our support targets are likely to offer ideal entry for long positioning.

Key British pound levels/Indicators

Level/Indicator

Level

200-Day SMA

1.5902

100-Day SMA

1.5698

50-Day SMA

1.5629

2011 GBP High

1.6745

The Japanese yen is the weakest performer at the open with a decline of nearly 1% at 10 a.m. in EST. The yen has suffered massive losses since the start of the month with the USD/JPY rebounding sharply off the 76-handle for an advance of more than 6% off the lows. With the Bank of Japan resuming its easing cycle, increased threat of deflation will continue to drag on the yen with our bias on the pair remaining weighted to the topside. Interim resistance targets are eyed at the 123.6% Fibonacci extension taken from the Oct. 30 and Feb. 1 troughs at 80.90 backed by the 138.2% extension at 81.50 and the 82-handle. Soft support rests at 80.40 with subsequent floors seen at the 100% extension at the 80-handle, 79.40 and the 78.6% extension at 79.10. Look for entry into long positions at the Asian opens with a pullback into our support targets offering entry for long positioning.

Key Japanese yen levels/Indicators

Level/Indicator

Level

200-Day SMA

77.99

100-Day SMA

77.41

50-Day SMA

77.55

2011 JPY High

75.50

Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.

Twitter: @MBForex
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About the Author
Michael Boutros Michael Boutros, Currency Analyst for DailyFX.com is a Technical/Fundamental Analyst specializing in the FX markets. E-mail: mboutros@fxcm.com.
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