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The Single currency felt the pull of gravity on Friday, tumbling from $1.1000 level the previous day to $1.0930, amid fears that China’s decision to impose new Hong Kong security law would lead to major US-China tussle. The risk that Hong Kong could lose some of its favorable U.S. trading terms that have helped it maintain its position as a global financial center, supported the greenback.
The Pound unfazed at $1.2204 despite British five-year government bond yields fell below zero for the first time on Thursday, a day after Britain sold its first government bond with a negative yield, ahead of British retail sales data due today.
The Japanese yen soared to 107.40 per dollar after the Bank of Japan decided on Friday to launch a new lending facility that aims to channel more funds to small and midsize businesses suffering from the economic blow of the coronavirus pandemic.
The Australian Dollar edged lower to $0.6540 after rating agency Fitch’s decision to cut Australia’s outlook to negative from stable and on escalating Sino-American tensions.
South Africa's rand rallied to 17.68 against the greenback on Thursday after the country's central bank cut its main lending rate by 50 basis points to 3.75% on Thursday to shield the economy, strangled by an eight-week-old lockdown aimed at reining in the coronavirus. Rate cuts this year now total to 275 basis points.
On the domestic foreign exchange market, the USD/MUR idled at 40.30(selling) post-Bank of Mauritius’ intervention yesterday.
10:00 - GBP - Retail Sales (MoM)(Apr)
15:30 - EUR - ECB Publishes Account of Monetary Policy Meeting
16:30 - CAD - Core Retail Sales (MoM)(Mar)
- 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