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The single currency roared higher to a two-week high at $1.0923 after Germany and France issued a call for a 500 billion-euro ($545.65 billion) recovery fund for Europe and proposed to allow the European Commission to borrow money on markets to finance the fund, while the sudden rise will face a test later with the release of ZEW survey on German investor sentiment.
The Sterling soared by 0.1% to $1.22 as broad dollar weakness helped the currency shrug off talk of negative interest rates from the Bank of England and a stalemate in Brexit negotiations.
The safe-haven yen eased on the greenback to be last at 107.40 per dollar as risk appetite got a boost after a potential coronavirus vaccine showed positive results in a Phase 1 trial. Moderna’s experimental vaccine showed promising early signs to create an immune-system response to fight off COVID-19.
The Australian Dollar benefited from hefty gains to $0.6527 on Tuesday despite minutes of the Reserve Bank of Australia’s May policy meeting showed it saw an ”unprecedented” economic contraction this quarter.
The Rand jumped to 18.37 per dollar as progress on reopening the global economy and risk-on sentiment boosted equities and commodity prices.
On the domestic market, the USD/MUR unfazed at 40.30(selling).
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- 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