The fundamental law of investing is the uncertainty of the future
The Shared currency dropped to $1.1780 as concerns about the rapid global spread of the Delta coronavirus variant drove investors to seek comfort in the U.S. dollar.
The Cable dived to $1.366 after BOE policymakers, namely Katherine Mann and Jonathan Haskel, turned down the hopes of monetary policy tightening. The U.S. issues 'Do Not Travel' alert for the U.K. over covid concerns also added downward pressure on the Pound.
The Japanese yen gained 109.50 versus the greenback as rampant coronavirus Delta variant jitters spurred a flight to the safe-haven JPY.
The Aussie dollar extended losses to $0.7326 as the latest minutes of the Reserve Bank of Australia (RBA) showed that the policymakers reiterated their rejection of the rate hike before 2024 while saying they will not increase the cash rate until actual inflation is sustainable with 2-3% target range.
The Lonnie touched its weakest intraday level since Feb.5 at 1.2807 per U.S dollar before recovering to 1.2769 on Monday, undermined by a fall in commodity price and a deepening of risk aversion over the highly contagious Delta variant worldwide.
South Africa's rand slipped to 14.57 against the U.S dollar as fears grew that a rampant coronavirus variant could upend the global economic recovery.
The dollar-rupee idled at 43(selling) on the Mauritian market.
16:30 - USD - Building Permits (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.