The world breaks everyone and, afterward, many are strong in broken places.
The single currency edged higher to $1.1861, despite European Central Bank President Christine Lagarde hinted at a dovish shift to the rates outlook for Europe.
Sterling inched lower to $1.3888 as British Prime Minister Boris Johnson was expected to confirm plans to remove nearly all remaining COVID-19 restrictions in England from July 19, despite a surge of cases to levels unseen for months.
Japanese Yen tumbled to 110.41 per dollar on data released on Monday showed that the Japanese wholesale prices continued to surge in June as import costs remained high at the fastest pace on record.
Loonie soared to 1.2458 per greenback, justifying the market’s optimism from Wednesday’s Bank of Canada monetary policy meeting amid a strong Canadian jobs report for June and the appointment of Carolyn Rogers as New Senior Deputy Governor of the BOC.
Aussie spiked to $0.7495 on upbeat Chinese trade surplus data, which showed the pace of economic recovery in Asia-Pacific’s largest economic power.
South Africa's rand plunged to 14.50 against its U.S counterpart on Monday, battered by an outbreak of violence and looting after the jailing of former president Jacob Zuma.
The dollar-rupee stayed put at 42.95(selling) on the local market.
16:30 - USD - Core CPI (MoM)(Jun)
“ Its not that I am so smart. Its just that I observe the market longer. Patience is key to success.” - Anonymous
Policy statement from the US Federal Reserve certainly helped fuel a spike upwards in the USDJPY which topped exactly in the 110.80-111.00 resistance zone ( Based on our previous forecast on 28.05.21) before trimming most of its post Fed gains. What next?
The Bank of Japan kept its policy unchanged today and held its negative interest rate firm while also holding steady to its quantitative easing program in contrast with the FED. The special COVID program is also extended till March 2022. The lag in economic recovery has put institutions under stress , with BOJ responding that they will announce new loan measures in the near term.
The sudden burst of volatility and uncertainty will continue to prevail in the market in the coming sessions. The forex pair , hovering near critical values of 110.80-111.00, remains a key pivot in the near term. 110.80 marks a complete A-B-C corrections as per Elliott wave principle which coincides also with 100% Fibo Extension. A strong break and close above these levels could signal medium term buying in the USD amid breach of stop losses.
Shorts in USDJPY can be initiated in the region of 110.50-110.80 with a stop above 111 with targets towards 109 and 108 levels.