USD/JPY Is Testing 118.20

As you can see from the screenshot above, the USD/JPY range has been continuing for many weeks now. Currently the pair has once again fallen to 118.20 and is testing the support at that level. There are two possible scenarios here: USD/JPY will either bounce off the support and will begin moving to the upside again, possibly reaching the resistance at 121.00 again, thus range will continue, or it will break below 118.20 and continue falling towards the next level of support, which is at 117.00. Either way, 118.20 is a key level and we have to watch the pair closely for possible entry points.

The U.S. Department of Justice Is Suing VW for Billions of Dollars

Just when you thought that the Volkswagen drama might be over it turned out it’s just beginning, because the US Department of Justice filed a civil lawsuit against the company for installing illegal devices meant to defeat emissions testing, and laid out claims that could push penalties into the tens of billions of dollars -- an opening salvo in a legal battle that could be far more costly for the German carmaker than had been expected.

The civil complaint filed Monday accuses the automaker of four violations of the Clean Air Act and outlines penalties that could amount to as much as $80 billion -- about four times as much as the maximum some legal experts had estimated. While the court is unlikely to come anywhere near that amount, according to a senior Justice Department official, the penalties sought against the company would still be in the billions of dollars, another senior Justice Department official said.

Volkswagen already faces hundreds of private lawsuits in the U.S. for its actions, which have been consolidated in San Francisco federal court. The Justice Department said it will ask for its suit to be transferred to that court as well, borrowing a tactic from its case against BP Plc in the Gulf oil spill litigation, where it worked alongside plaintiff’s lawyers.

Volkswagen is also facing lawsuits from state attorneys general, while regulators in at least seven countries, including Germany, have launched investigations. The U.S. could also bring criminal charges against Volkswagen for lying to the Environmental Protection Agency about the cheating devices.

“The U.S. seeks and obtains larger penalties for environmental violations than any other country, ” said David Uhlmann, a law professor at the University of Michigan and former head of the environmental crimes section of the Justice Department. “VW needs to fix the problem it has created, cooperate with the government investigations and make its victims whole.”

Volkswagen’s preferred shares fell 5.5 percent in Frankfurt, the most in two months, before the suit was revealed on Monday. The shares have dropped more than 22 percent since Sept.18, the day the EPA said the automaker admitted cheating on emissions tests.The carmaker’s shares in the U.S., where they are listed as American depositary receipts, declined 2.8 percent to $30.10 after falling as much as 4.2 percent,the steepest intraday decline in two months.

EUR/GBP: A Triple Top?

EUR/GBP has been attempting to break above the resistance at 0.7415 – 0.7420 since before the holidays and for the past few weeks managed to form what appears to be a triple top under that level. What is more, the pair also formed a falling star candlestick on the four-hour time-frame. Under these circumstances I think we can expect a move to the downside, possibly towards the support at 0.7312, which coincides with the (MA)89 on the four-hour time frame. However, whether this is the end of the bullish trend remains to be seen.