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USD
EUR/USD
The Shared currency dived to a three-month low at $1.1772 as higher-than-expected U.S. inflation re-triggered bets that the U.S. Federal Reserve will tighten its monetary policy faster than expected.
GBP/USD
The Cable lost ground to $1.3822 on disappointing data released by the British Retail Consortium, along with COVID-19 and Brexit woes turned out to be key factors that acted as a headwind for the British pound.
USD/JPY
The Japanese yen dropped to 110.50 against the U.S dollar despite Japanese manufacturers’ business confidence rose in July to hit a more than two-and-a-half-year high.
AUD/USD
The Aussie dollar dropped to $0.7459 on U.S. dollar strength and after Sydney extended its COVID-19 lockdown by two weeks.
USD/CAD
The Loonie slipped to 1.2506 versus the U.S dollar amid the Bank of Canada Interest rate decision due today.
USD/ZAR
South Africa’s rand trickled to a three-month low on Tuesday as violent protests over economic hardship and inequality rippled across the country.
USD/MUR
The dollar-rupee climbed by 10 cents to 43.05(Selling) on the U.S dollar rally.
18:00 - CAD - BoC Interest Rate Decision
18:30 - USD - Crude Oil Inventories
20:00 - USD - Fed Chair Powell Testifies
“ 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.
