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The rally on the Single currency has been capped at $1.0896 yesterday after U.S. Federal Reserve Chairman Jerome Powell dismissed speculation that policymakers will adopt negative interest rates, but has warned about a sustained economic downturn caused by the pandemic.
The cable extended losses for the fourth consecutive day below $1.22 as downbeat performance of the UK data, while Rishi Sunak extended the furlough scheme and BoE Governor Andrew Bailey opened the door to further bond-buying.
The yen remained bid at 106.90 versus the U.S dollar, amid broad risk-off sentiment, as US-China tension intensified after Trump ordered a Federal retirement savings fund to delay diversifying into Chinese stocks.
The Aussie on the back foot below $0.6435 after Australia’s monthly employment data for April showed jobs dived by a record 594,300 and the unemployment rate shot up to 6.2, falling sharply to 63.5%.
The South African rand edged lower to 18.58 per dollar as pessimism surrounding the US-China tussle weighed on the market’s risk-tone.
The USD/MUR surged by 15 cents to 40.45(selling) this morning on broad U.S dollar strength.
16:30 - USD - Initial Jobless Claims
19:15 - CAD - BoC Gov Poloz Speaks
- From an Elliott Wave standpoint, USDCHF could potentially unfold into compelling impulsive Wave C of the zigzag correction of Wave (2) to a narrowing region 0.9550 (50% retracement of Wave (1)) to 0.9395 (100% projection of Wave A through B) in the near term trend, from the downside bias from April 6th high of 0.9797.
- Price could immediately start to shoot back up into Wave (3) on a longer perspective.
- Piercing above the resistance 0.9905 would endorse the structure.
- Alternatively, broader bearish invalidation of Elliott Wave Structure rest at 0.9191 of March 9th low while Relative Strength Index signals a bullish recoil higher for the pair.
• After rallying to the downside from a high of 112.22 to 101.17 amid global pandemic threat, USD/JPY has been in a correcting mode since 9th March 2020 and seemed to have recently completed an W-X-Y Double Zig-Zag structure of Wave (2) reaching a high of 111.64 on 27th March 2020.
• Two strong indicators were flashing a trend reversal: ending diagonal at Wave 5 of Wave c and bearish RSI divergence.
• On the hourly chart, as per Elliott Wave analysis, the pair might resume its downwards trend targeting 100.64 - 93.78 to unfold Wave (3), a projection of 100%-161.8% of Fibonacci level.
• At 107.70 today, USD/JPY is percolating towards its target from 110.41 to 107.84, as per chart.
• On a side note, resumption of a bullish USD/JPY would mark an invalidation of the Elliott Wave structure above 112.22