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The shared currency plummeted from $1.1970 to $1.1922, on comments from Atlanta Fed President Bostic and Fed Governor Bowman that growth surging to an estimated 7% this year and inflation well above the Fed's 2% target, suggesting interest rates to rise in late 2022.
Sterling faded to $1.3960 following a 41% jump in the Delta Plus Covid infections in Britain, coupled with British policymakers’ lack of readiness to alter the demands over the Northern Ireland (NI) protocol over fishing quotas.
Yen nosedived to 111.11 per dollar as Japan's factory activity expanded at the slowest pace in four months in June. A sign that momentum in the world's third-largest economy was levelling out before Tokyo is set to host the Olympic Games next month.
Loonie soared to 1.2250 against the greenback last night, tracking mounting Brent oil prices at $76 to its highest since late 2018, after data showed U.S. crude inventories declined as travel picks up.
Aussie retreated from $0.76 to $0.7570 on risk aversion as China warned the US over its warships in the Taiwan Strait.
South African rand firmed at 14.13 on Wednesday as South Africa's headline inflation in May soared to a 30-month high of 5.2%, as expected but above the mid-point of the central bank's target range of 3% to 6%.
Dollar-rupee stayed put at 41.45(selling) on the local market.
12:00 - EUR - German Ifo Business Climate
15:00 - GBP - BoE Interest Rate Decision (Jun)
16:30 - USD - Core Durable Goods Orders (MoM)(May)
16:30 - USD - Initial Jobless Claims
16:30 - USD - GDP (QoQ)(Q1)
“ 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.