Dollar/yen gave back more than 4% on Thursday in aggressive selling to reach the lowest level in 14 months as the carry trades accelerated their collapse. I think a big single position was unwound probably in NZD/JPY or AUD/JPY and the rest of the flock followed. The Australian and New Zealand dollars have been at the losing end of these aggressive sell-offs, with the pound and the euro in cue. Dollar/Europe is overbought and dollar/yen is oversold; if the stock market can pad its recovery from late Thursday, the Europe/yen crosses should bounce today. It’s a big if, as we don’t know if the last big position was unwound or whether the last big player managed to patch up its enormous losses.

Euro/dollar

The euro/dollar sank to a three-month low on Thursday and it practically reached the target of the double top at 1.3350 before recouping losses into the close. So, the market behaved as expected. It is severely oversold in the short term and I think it should recover today. Following this bounce, the sell-off should continue.

Below 1.3363, support comes at 1.3353. A pivot low is at 1.3264. Distant support is at 1.3115.

Strong resistance is at 1.3480. 1.3555 follows this. The next level is 1.3600. This is followed by 1.3640 and 1.3695. Only a break above 1.3750 would negate the double top, but this is unlikely.

Oscillators are declining.

NEAR-TERM: Mixed
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/yen

Dollar/yen collapsed to a 14-month low in the third largest range ever amid liquidation of carry trades. Once again, the sell-off was driven by sales in commodity and European currencies. The downside remains favored, but at a slower pace.

Initial support is at 112.90 from a 50-point pivot that targets 113.40 and 112.40. Below the pivot at 112.00 there is support at 111.60 from a 50-point pivot, which targets 112.10 and 111.10. Distant support looms at 110.35 from a 50-point pivot that targets 109.85 and 110.85. Then, there is support at 109.84 – this is the level where China revalued the yuan.

Initial resistance is at 113.90. This is followed by 114.20 from another 50-point pivot that targets 113.70 and 114.70. 115.60 now looks a world away.

Oscillators are declining.

NEAR-TERM: Bearish
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Sterling/dollar

Sterling/dollar fell to a new two-month low of 1.9771 on Thursday. More weakness remains in store, but an immediate bounce is likely.

Immediate support is at 1.9771. Below it there is support at 1.9719. Next big level is only 1.9625.

Initial resistance is at 1.9875. Above 1.9920, strong resistance is now seen at 2.0015.

Oscillators are declining.

NEAR-TERM: Mixed to slightly lower
MEDIUM-TERM: Bearish
LONG-TERM: Bullish

Dollar/Swiss franc

Dollar/Swiss fell from a new high for the uptrend, as an exception to the commodity currencies. But that was in line with last night’s forecast and I hope you took some profit on long positions.

Immediate support is at 1.2115. This is followed by 1.2070. Next level is 1.2015. Distant support is still seen at 1.1950.

Initial resistance remains at 1.2225. The next level is perched at 1.2305.

Oscillators are rising.

NEAR-TERM: Mixed
MEDIUM-TERM: Bullish
LONG-TERM: Bearish

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