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The Shared currency towered to $1.1816 on crumbling U.S. yields, as the latest U.S coronavirus relief package got bogged down in Congress.
The Sterling initially eased gains to $1.2977 on fears of a second wave virus infections in the U.K., but it later clawed back to $1.3090 on broad U.S dollar weakness.
The Japanese Yen trimmed losses to 105.68 against the U.S dollar on positive Japan's Services PMI in the Asian session.
The Aussie dollar ascended to $0.7186 despite downbeat China’s Caixin Services PMI data earlier today.
The South Africa's rand extended losses to 17.30/dlr amid fears over the pace of global economic recovery, as coronavirus cases surge.
The Mauritian rupee climbed by 5 cents to 40.15(Selling) on the domestic market.
12:30 - GBP - Services PMI (Jul)
12:30 - GBP - Composite PMI (Jul)
16:15 - USD - ADP Nonfarm Employment Change (Jul)
18:00 - USD - ISM Non Manufacturing PMI (Jul)
18:30 - USD - Crude oil inventories
After rallying from bottoming all time low at 101.20 to 111.71 in covid-fueled March period, dwarfing an expanding leading diagonal ((1)) in 5 waves, USD/JPY has ever since unfolded in a corrective double three combination pattern (W)-(X)-(Y) of wave ((2)).
From an Elliott Wave trading standpoint, the pair may experience further decline to the choppy downside to complete countertrend wave (Y) because- An impulse usually retraces to at least wave (4) of previous smaller trend, that is 105.19.
- Wave (4) of wave ((1)) coincides with 61.8% Fibonnacii retracement of wave ((1)), i.e 105.19.
- 78.6% projection wave (W) through (X) targets level 105.30.
- In EW lexicon, a pullback to the previous wave (2) usually happen to a leading diagonal ((1)).
- Post-triangle thrust measurement of wave B of (Y) leads exactly to 105.20.
- USD/JPY is still trading within the bearish parellel trendlines.
Thus, hibernation of price action could be seen in the locality of 105.30/19.On the flipside, a violent recoil to revive bullish momentum at 109.84 of June 4th would nullify this set-up, warning that the potency of positioning-derived bearish signal may be ebbing.
On the hourly Chart, The USD/CAD has found strong support again near $1.3350 region yesterday. The pair fell to as low as $1.3345 before bouncing off relentlessly to as high as $1.3444 this morning.
We feel that the USD/CAD could be in an early stage of a bullish run towards $1.4017 in the coming months.
On the downside, $1.3315 remains a strong baseline , while a break below that level would open the door for further weakness on the USD/CAD near $1.3200.