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The common currency wobbled near $1.1940, shrugging off U.S. President Biden on Thursday embracing a bipartisan Senate deal to deliver $569 billion of dollars on building roads, bridges and highways. Market eyeing PCE inflation report featured in the US economic docket later.
The pound initially dropped to $1.3888 before recovering to $1.3920 on Thursday, after the Bank of England left its benchmark interest rate at an all-time low and said inflation would surpass 3% as Britain's locked-down economy reopens, but the climb further above its 2% target would only be "temporary".
Yen seesawed near 110.85 per dollar as fewer Americans filed new claims for unemployment benefits last week, weaker than the market expectation.
Loonie tread water at 1.2313 against the greenback following preliminary data for May from Statistics Canada showed factory sales rising 1% from April and wholesale trade up 1.1%.
Aussie edged higher to $0.7592 on reports suggesting China may increase fiscal policy support in H221 to meet its budget deficit goal and accelerate local bond issuances to boost infrastructure investment.
Rand soared to 14.17 per greenback after Statistics South Africa also published data showing that producer price inflation quickened to 7.4% year-on-year in May, from 6.7% in April.
The domestic pair unchanged at 41.45(selling).
“ 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.