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The single currency tumbled to $1.0900 amid dismal EU Manufacturing PMI data and risk-off mode on Monday, while investors' will keep an eye on a ruling due today at noon regarding a court challenge from German academics to the European Central Bank’s bond-buying program.
The cable consolidated at $1.2460, driven by the nervous sentiment before the UK-US trade talks and the final reading of British Services PMI for April.
The yen escalated to 106.60 against the greenback amid a series of weak U.S. manufacturing activity numbers and rising tensions between the United States and China dented risk sentiment on Monday, while Japanese banks are off for Children's Day.
The Australian dollar crept higher to $0.6450 benefiting from mood shift and after the Reserve Bank of Australia left interest rates on hold at record lows of 0.25% and recommitted to buy as much government debt as needed.
The South African rand surged to 18.45 per dollar but remained at the mercy of global risk sentiment in emerging countries.
On the local Market, USD/MUR jumped by 20 cents to 40.50(selling), tracking a softer EUR/USD.
12:30 - GBP - Composite PMI (Apr)
12:30 - GBP - Construction PMI (Apr)
12:30 - GBP - Services PMI (Apr)
18:00 - USD - ISM Non-Manufacturing PMI (Apr)
- 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