By: Bastian Rubben
As I estimated here yesterday, the US indices made the bullish reversal, as the technology sector pulled the markets to new highs. The reversal was aggressive and it looks like that the hedge funds managers, who believed that a bearish correction would occur, now have to "chase" the S&P 500, which means that they are going to push more money to the stock markets.
The rising of the stocks weakened the USD against most of the currencies, as the Euro broke the strong resistance at 1.33 and it will try to complete the "Cup & Handle" pattern under 1.35. However, there was on currency that the USD was not weakening against, which was the Japanese Yen. The JPY has been acting the opposite to the general trend of the major currencies in the recent weeks, as it strengthened when the weakened and weakened when they strengthened. The pair USD/JPY corrected 60% of the recent rally and the bullish reversal is seemed as started. Therefore, If the USD successfully crosses above yesterday's high, it might continue to the recent pick at 84.0.
The daily chart of the EUR/JPY reminds the daily chart of the USD/JPY, as we see here a correction of 50% and a bullish reversal, which is a bit stronger due to the momentum of the Euro against the USD. The test for the EUR is yesterday's high, which its break-up will open the way to the top at 111.40.
