Daily Currency Outlook: GPB/JPY And EUR/JPY: May 04, 2012

Daily Pivots: (S1) 129.44; (P) 129.95; (R1) 130.21;

At this point, we're favoring the case that recovery from 127.10 has finished at 131.79. Deeper fall would be seen to 127.10 support. Break will confirm resumption of whole fall from 133.48. In the case, deeper decline should be seen to 61.8% retracement of 117.29 to 133.48 at 123.47. On the upside, break of 131.79, though, will turn focus back to 133.48 resistance instead.

In the bigger picture, with 126.54 support intact, rise from 117.29 should still be in progress. Current development is still in line with the view that choppy decline from 163.05 is finished at 116.83 already. We'd favor further rise to 140.02 key resistance level next. Decisive break there will confirm this bullish case and target 163.05 key resistance next. Nonetheless, another fall and break of 126.54 will put focus back to 116.83 low instead.
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EUR/JPY Daily Outlook

Daily Pivots: (S1) 105.13; (P) 105.63; (R1) 105.95;

The choppy decline from 108.00 is still in progress and intraday bias in EUR/JPY remains on the downside for 104.61 support. Break will confirm resumption of whole fall from 111.43 and should target target 61.8% retracement of 97.03 to 111.43 at 102.53 next. On the upside, above 106.54 minor resistance will turn bias neutral first. Further break of 108.00 will resume the rebound from 104.61 towards 111.43 high instead.

In the bigger picture, the question remains on whether down trend from 169.96 has completed at 97.03 and the picture remains unclear. There were loss of medium term downside momentum as seen in convergence condition in weekly MACD. But rebound from 97.03 lacked sustainable strength to break through 111.57 yet. We'll stay neutral first. Note that firstly, while another fall cannot be ruled out yet, the break of 97.03 would be marginal. Meanwhile, sustain trading above 111.57 should raise much odds for the case that EUR/JPY's trend is reversing.
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