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The Single currency slipped to $1.0890 on Monday amid the broad-based demand for the American dollar, while German IFO expectations Index (May) is scheduled for release at noon.
Sterling caught a breather near $1.2190 amid a lack of major catalysts on Spring Bank Holiday. The Pound likely to be on defensive after members of British Prime Minister Boris Johnson's party called for the resignation of an influential aide, Dominic Cummings for breaking travel restrictions during the coronavirus lockdown.
The Yen recovered to 107.65 per dollar although news of Japan’s likely removes of state of emergency from Tokyo and nearness to another aid packages which seemed to probe the risk-off sentiment.
The Australian dollar gave up early gains to trade at $0.6535 as risk aversion offset optimism about the country's emergence from coronavirus lockdowns.
South Africa's rand strengthened to 17.55 against the greenback despite the emergence of a fresh source of tension between the United States and China after Beijing moved to impose a new security law on Hong Kong hurt demand for currencies seen as higher risk.
On the domestic market, the USD/MUR edged higher by 15 cents to 40.45(selling), tracking a bullish U.S dollar across the board.
10:00 - EUR - German GDP (QoQ)(Q1)
12:00 - EUR - German Ifo Business Climate Index (May)
21:30 - 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