Technical Analyst, Saxo Bank Group
USDJPY is once again testing support at 145.30A break and close below is likely to push USDJPY to test key support at 140.25. It seems to have formed a descending like pattern. Break out direction could be either way.
However, RSI still shows positive sentiment since it has not broken below 40 threshold, and there is no divergence on the September-October peaks which indicates higher levels. Next couple of days could be crucial. If USDJPY breaks above 148.85 new highs are likely.
If RSI closes above its short-term falling trend line there is good indication of this new highs scenario to play out.
EURUSD seems to be trading in a rising channel testing October peak at around 1.01 thereby making higher highs and higher lows i.e., short-term uptrend.
If 1.01, which is just a minor resistance, is broken resistance at around 1.02 is next and the upper trendline in the channel. Key resistance at 1.0370
RSI is showing positive sentiment supporting short-term bullish view.
However, if EURUSD slides back below 0.9730 September lows around 0.9535 is likely to be tested.
Dollar Index was rejected at the short-term rising trendline it tried to break back above a couple of days ago. Short-term down trend is confirmed with lower lows and lower highs.
The Dollar Index is few cents from testing the medium-term rising trendline (lower black line). If the trendline is broken support at 107.67 is likely to be tested. A close below 107.67 is likely to lead to a sell-off down to around 105-104.50.
For the Dollar Index to reverse this bearish picture a close above 113.05 Is needed.
An RSI close above its upper falling trend line in the falling channel it is forming could be first indication of this scenario to unfold.
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