Europe recovers and Wall Street close at record high

Improved sentiment in Europe following the Easter holiday pushed markets higher on Tuesday. Global Investors were reassured, following reports of an extension granted to Cyprus to meet budget targets, as part of the European rescue package expected to reach the country in May.

Cyprus Stock Exchange opened for the first time in two weeks, and declined by 2.5% due to the crisis and the resignation of the country Finance Minister Michael Messaris. Other European stock markets traded higher on the session, recovering from previous week declines.

Wall Street closed at record high with S&P 500 and DJ30 marking all times highs, as good macro data from the US in recent month provides support for the market rally. News on Tuesday showed that U.S. factory orders rose in February by 3% due to an increase in demand for cars and commercial aircraft.

USD/JPY Tehcnical analysis

USDJPY – Fell from its resistance as Predicted

The USDJPY pair fell from its minor resistance level which we mentioned in our analysis over the past two days. The price action is trading within the downward channel (shown in pink lines) on a 30 minute time frame, and it has already broken out of its upward channel (shown in yellow lines).

The RSI is showing some mixed signals and this is because, if we consider the solid orange line and compare this to the price action, we will see that, this is trading in line with the price action. So, we could have a bias towards the down side. However the dashed line shown in orange colour tracks the most recent price action, which is giving the deflection signal- so we could have a bias towards the upside.

Most importantly, if the price does break the upper line of the downward channel (shown in pink lines) then the price could easily move towards the minor resistance level otherwise, the bias could still be towards the downside.

USD/JPY Technical analysis

USDJPY- Further Downside May Prevail

Fundamental Analysis

The new governor of the Central Bank of Japan, Haruhiko Kuroda, said that he is looking to increase the maturity dates for the government bonds from three years to five years. The Bank of Japan is buying these bonds currently to support its asset purchase programme. He also confirmed that the Bank of Japan may also look to buy riskier assets, which is an aggressive step to beat its deflation target however, such a decision needs to be approved by all nine board members at their next policy meeting.

Technical Analysis

The USDJPY pair is trading within the downward channel on a 30 minute time frame. The price action pierced its Bollinger band near its minor support level which was also touching the lower line of this downward channel. However, the price action remains weak within this channel so bias could be towards the downside. The RSI is trading in line with the price action which also favours the biasness to the downside.

EURO/USD technical analysis

Euro Dollar – Still more squeeze

The EURUSD pair has broken its support zone on a 30 minute time frame. The price action is piercing the Bollinger Band however, this may not have much importance until we reach an important level of support. The RSI is trading in line with the price action which means further downward move could be on the on the way.

USD/JPY Technical Analysis

USDJPY – Bias Could be Towards the Upside

The USDJPY pair has broken its downward channel which is shown in yellow lines. The price action reversed its trend only a couple of pips shy off from its minor support zone, which was given in our analysis yesterday. The pair is trading within the upward channel which is shown in purple lines. The price has also retracted from its minor resistance zone as predicted yesterday.

At the time of writing this article, the price action is bouncing back up from its lower line of the upward channel, and if the price does find a support at this point, then the coming minor resistance level may not hold, as the price has already been there quite a few times. The RSI is trading in line with the price action which means bias could be towards the upside.

GBPUSD Technical Analysis

GBPUSD – How to play the upcoming GDP Number

Fundamental Analysis

The GBPUSD pair is finding some strength on Wednesday however, investors are hesitating to bet on either side ahead of an important final GDP Q/Q report which is due at 09:30 GMT.

Most economists are predicting a decline in GDP growth, given that the country is standing on very flaky ground, and the most recent economic data has also fell short of expectations. The forecast number for the final GDP q/q is -0.3% while the previous reading was also -0.3%.

Technical Analysis

The price action has broken out of its ascending triangle and now it is re-testing its lower base line. The purple rectangle on the chart represents where the price could go, if this pattern does play out completely on a 30 minute time frame. The longer term downward trend line show in a yellow colour could add a further headwind for its upward movement.

However, the RSI is trading in line with the price action which could push the price higher towards its minor resistance.