Biggerst mover during Asian trading hours was the currency pair USDJPY trading at 132.21 (-3.48%) at time of writing. The Bank of Japan (BoJ) surprised the market this am and tightened its interest rate policy somewhat. However, it only changed the possible fluctuation range for ten-year bonds from the previous 25 to 50 basis points. That opens up the space for higher interest rates, but that's not yet the big turnaround in interest rates. Nonetheless, the market seems concerned that the BoJ may exit ultra-loose monetary policy next year.
From a technical perspective there could be some room now for a quick intraday recovery on the one hand. The initial reaction seems a bit exaggerated. On the other hand, the 200 dma (135.72) has clearly been broken after testing this moving average multiple times over the past few days. In addition, liquidity is likely to decrease more and more towards the end of the year and trends could strengthen further. In this respect, a possible recovery could already be over at the old December low (133.62).
The uptrend in EURUSD is still active, albeit somewhat muted above the 1.0600 level. Nevertheless, the thinning liquidity could lead to another spike towards 1.0780/1.0800. But I admit that there is also some hope in that thought. I would like to sell the Euro at a slightly higher level. Short-term support comes in at 1.0579/76 (today’s and yesterday’s lows). Next resistance can be found around 1.0711 (upper Bollinger band).
The currency pair GBPUSD is still trading above its 200 dma (1.2092) but if I were long I would be starting to worry about the lack of momentum to the upside. Sterling is capped by 1.2200 for now and a sustained break of the 1.2100 treshold could quickly lead to a deeper correction with spot levels of 1.19xx and below.
Good luck,
Sebbo