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The Shared currency recovered to $1.1864 after a mixed bag of U.S labour data on Friday allayed investor fears about a hastening end to monetary policy.
The Cable sparked to $1.3842 ahead of UK PM Boris johnson's key speech on Monday, where he is expected to announce that social distancing will be scrapped in England from 19 July as people will be asked to use their own judgement to manage the risk of Covid-19.
The Japanese yen surged to 111.12 versus the greenback, with Japan’s services PMI for June at a higher-than-expected 48.0.
The Aussie dollar bounced from a seven-low of $0.7445 on Friday to $0.7511 this morning on U.S dollar weakness and ahead of an Australian central bank policy meeting tomorrow, which could see a course change in its massive stimulus programme.
The Canadian dollar rocketed to 1.2347 against the U.S dollar as the business activity in Canada's manufacturing sector continued to expand in June, data showed on Friday.
South Africa's rand strengthened to 14.27 against the U.S dollar on Friday afternoon, as the dollar was weighed down by some of the weaker details of what was overall a strong U.S. non-farm payrolls report.
The dollar-rupee idled at 43.20(selling) on the local market.
12:30 - GBP - Composite PMI
12:30 - GBP - Services PMI
13:00 - EUR - ECB President Lagarde Speaks
“ 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.