The fundamental law of investing is the uncertainty of the future
The Shared currency trimmed losses to $1.1901 as investors await testimony from U.S. Federal Reserve Chairman Jerome Powell after being caught off-guard by the central bank’s latest policy decision.
The Cable surged to $1.3903 as the market looks forward to the re-opening of the U.K. economy on Jul. 19 as well as a Bank of England policy decision, to be handed down on Thursday.
The Japanese yen slipped to 110.42 versus the U.S dollar on the back of a slower vaccination rollout program and lockdown restriction kept the currency pressurized.
The Aussie dollar meandered at $0.7508 on escalating tensions between Australia and China. As reported, Canberra has dragged Beijing to WTO, after latter slap tariffs on Australind wine imports.
The Loonie dropped to 1.2386 per U.S dollar despite a modest uptick in oil prices.
South Africa's rand firmed at 14.29 as a rally in the dollar stalled following a surprise hawkish shift from the U.S. Federal Reserve last week.
The local pair unbothered at 41.45(selling) today.
18:00 - USD - Existing Home Sales (May)
22:00 - 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.