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The Single currency capped below $1.1150 on broad dollar weakness due to the escalating US riots while markets remain jittery amid renewed US-China trade concerns.
The pound surged to a four-week high at $1.2515, as a risk-on mood in global markets prompted by hopes for an economic recovery caused the safe-haven dollar to weaken, but recovered to $1.2480 weighed down by Brexit-related risks, speculation about negative rates and the fact that the United Kingdom has one of the highest COVID-19 death tolls in the world.
The Japanese Yen edged lower to 107.70 region when U.S. manufacturing activity eased off an 11-year low in May at 43.1, fitting into markets' expectations that the worst of the economic downturn was behind as businesses reopen.
The Aussie defied gravity to $0.6810 on reports that China had told state-owned firms to halt purchases of soybeans and pork from the United States. The Reserve Bank of Australia left its interest rate unchanged at 0.25%.
South Africa's rand firmed more than 1% at 17.38/dlr on Monday, lifted by hopes of economic recoveries at home and abroad as more countries eased coronavirus lockdowns.
The Mauritian rupee idled at 40.45(selling) on the local foreign exchange market.
- 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