Daily Currency Outlook, GPB/JPY And EUR/JPY: October 26, 2012

Daily Pivots: (S1) 128.35; (P) 129.00; (R1) 130.06;

Intraday bias in GBP/JPY remains on the upside for the moment. Current rally is now expected to continue to 100% projection of 120.82 to 128.82 from 124.72 at 132.72. On the downside, break of 127.09 minor support is needed to indicate short term topping. Otherwise, we'll stay bullish even in case of retreat.

In the bigger picture, at this point, we'd like to maintain that price actions from 116.83 (2011 low) are corrective in nature so far. Rise from 118.82 could be the third leg of the pattern from 116.83 and might target 133.48 and above. But this is far from being certain. After all, the likely scenario is that we'll see more range trading between 116.83 and 140.02 (50% retracement of 163.05 to 116.83 at 139.94) ahead, before an eventual downside breakout. We'll favor this view as long as 140.02 resistance holds.

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EUR/JPY Daily Outlook

Daily Pivots: (S1) 103.39; (P) 103.90; (R1) 104.36;

Intraday bias in EUR/JPY remains neutral for the moment and the consolidation from 104.58 is still in progress. Deeper decline cannot be ruled out. But after all, near term outlook will stay bullish as long as 100.14 support holds and we'd expect another rally ahead. Above 104.58 should target 111.43 key resistance.

In the bigger picture, we're favoring the case that whole down trend from 169.96 (3008) has completed at 94.11 already, on bullish convergence condition in weekly MACD. Focus is now on 111.43 key resistance level. Break will confirm this bullish case and bring further medium term rise to 123.31 and above (38.2% retracement of 169.96 to 94.11 at 123.08). And, we'd favor this bullish scenario as long as 100.14 support holds. Though, considering that EUR/JPY can't take out 55 weeks EMA decisively yet, break of 100.14 will favor another low below 94.11 instead.

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