EUR/USD Drops

I forecasted the one of the major currency pair, EUR/USD would stop its decline at 1.1350 level and rebound on Tuesday. But it broke the level and shrank under 1.13. Its feature seems double-tops pattern and it leads the more decline. It has the possibility of diving into 1.1214, the lowest point since late April, and may be rebound at the level. But it doesn't guarantee the upward trend.

The forecast of the pair is negative. Goldman Sachs anticipated the near parity. It expected the 1.05 level, Investing.com reported on Friday. Another investment bank, Deutsche spoke, too. And its expects are advanced from the breaking parity.

Meanwhile, the core retail sales in April increased 0.8 percent prior to March. It was expected 0.6 percent. It seems lead the strong US Dollar.

Japanese Yen- Strong Momentum yet

USD/JPY 4-hour chart, source: forexfactoy.com

Japanese Yen(JPY) is classified as the safety asset with US Dollar. The economic uncertainty uses to lead JPY and USD to higher value in the financial market. But where does JPY go if Japanese economic situation itself is under the uncertainty?

Japan's leaders have tried the weak JPY to stimulate the its economy for years. Abe, Japanese premier intervened the fx market speaking the weak JPY, and Kuroda, governor of Bank of Japan(BOJ) decided the index rate into minus.

But their desire was not accepted by the market player, it has flied high.

Japanese economic situation is under the depression, too. Its fiscal sustainability faces the going worse and it is the burden of economy and government finance. Abe's cabinet guesses the increase of the consumption tax to solve the fiscal sustainability problem and the risk of shrink in the national credit grade.

Japan's credit grade ranked AAA, the highest class till late 1990s, but it has gradually step down and it ranks at A1(Mudis and S&P) or A2(Pitch) now. Its ranking is under the that of China and Korea.

In this week USD/JPY goes high and JPY's value is weaken. It rose 108.98 from 105.45 since May 3. USD/JPY steps back for the adjustment. It's not uncertain it makes the double-tops pattern or rise again after the adjustment yet in the 4-hour chart. But in the daily chart it has lowered the tops since this year and made the downward trend.

USD/JPY rises in short term and it turns its direction again, I think.

USD/JPY daily chart, source: forexfactoy.com

EUR/USD: Awaiting another opportunity

EUR/USD h4 chart, source:forexfactory.com

From Apr. 25 Euro advanced but it seems to swing. It reached 1.16 level but fell down now. It doesn't show a meaningful pattern such as a Head-and-Shoulder pattern. The H-S pattern may be discovered but it's not explicit.

It seems that it doesn't shrink but doesn't turn its direction. It will sidle along in the narrow channel, bandwidth from 1.1350 to 1.1450 for a while, I think.

The worldwide recession gives no explicit signal to traders. Market-participants agree the strong US dollar and Japanese Yen, but do they decide the direction of Euro?