A rapid round up of the four currency indices is always helpful to give a view on sentiment, safe haven and direction for these four currencies and all on the daily timeframe.
The Japanese yen has been weakening on risk-on sentiment and the price action of the 8th January giving it a healthy shove lower, as it now builds support in the 8,600. If this is breached expect to see the index move to test 8,500 and beyond. Moving to the US dollar alongside, this has seen a bounce higher of some regard, moving to test resistance in the 12,300 and which triggered the reversal lower from a similar rally in December last year. So we may see a repeat and a return to the 12,200 in due course as the price spreads are narrowing and signalling a weakening in positive sentiment.
Moving to the euro, this is finally finding some upside momentum as it attempts to break free from this narrow trading range of 126 to 128. Once this upper level is finally broken a solid platform will then be in place for a recovery of strength in the single currency.
And finally to the British pound which looks to be taking the opposite direction, and with weak inflation data today, this is adding pressure to the BoE to reduce in interest rates which is likely to see the currency weaken as a result, and break the floor of current support in the 116.50. Once broken we may even see a return lower to test the 112.50 area 500 points below.
Charts from NinjaTrader and indicators from Quantum Trading