USD/JPY Eyes April High Amid First Overbought Reading Since December

Talking Points:

- GBP/USD Rebounds From Fresh Monthly Low (1.6600) on BoE Dissent

- USD/JPY to Eye April High (104.11) on Close Above 103.30

- USDOLLAR Threatens Former Support; RSI Pushes Back Into Overbought Territory

GBP/USD:

• Rebounds from 1.6600 as Bank of England (BoE) Minutes shows 7-2 vote count, with Martin Weale & Ian McCafferty dissenting against the majority.
• Despite the greater rift in the BoE, GBP/USD struggles to retrace the decline from the weaker-than-expected U.K. Consumer Price report.
• The DailyFX Speculative Sentiment Index (SSI) suggests that the GBP/USD remains vulnerable to further losses as retail crowd is mostly net-long the dollar, with the ratio standing at +1.52.

USD/JPY:

• Rallies to fresh monthly high of 103.39 after closing above the key 102.80-90 zone, with the Relative Strength Index (RSI) pushing above 70; first overbought reading since December 2013.
• May retrace the entire decline from the April high (104.11) on a break & close above 103.30-50.
• As the upward trending channel taking shape, will look for a higher-low on a near-term correction.

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Next GBP Downturn Ready as ST Oversold Readings Cleared after CPI

USDOLLAR Daily

Chart - Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

• Dow Jones-FXCM U.S. Dollar Index climbs to a fresh monthly high of 10,616 after closing above the key 10,590 pivot, with the RSI pushing back into overbought territory.
• May see former support (10,615) act as new resistance, especially if the Federal Open Market Committee (FOMC) Minutes fail to prop up interest rate expectations.
• Need a bearish break in the RSI to look for a more meaningful USDOLLAR correction.
• Interim Resistance: 10,602 (38.2% retracement) to 10,615 (78.6% expansion)
• Interim Support: 10,440 (78.6% retracement) to 10,450 Pivot

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--- Written by David Song, Currency Analyst

To contact David, e-mail [email protected]. Follow me on Twitter at @DavidJSong.

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