Where the USD/JPY rally could resume
After edging mildly lower today, dollar recovered across the board, partly caused by a large EUR/USD sell order from a US fund. Despite sharp decline last week dollar still lack the decisive downside momentum to push it further lower yet. Geopolitical risk and uncertainty about Fed’s next rate decision in Aug is still clouding the market. Also, strong May industrial orders in Eurozone which shows 2.3% mom and 14.2% yoy increase could limit downside of EUR/USD. Further choppy trading may continue until Consumer Confidence and housing data from US tomorrow.
Canadian May retail sales will be released later today with expectation of 0.2% mom growth while ex-auto sales is expected to increase 0.4% mom, much slower than previous months’ 1.7% and 1.9% growth respectively.
USD/JPY
Daily Pivots: (S1) 115.63; (P) 116.37; (R1) 116.92
USD/JPY’s fall from 117.87 has reached as low as 115.80, just inches above 100% projection of 117.87 to 116.53 from 117.13 at 115.79. Subsequent rebound has extended further today, pushing USD/JPY above 116.53 support turned resistance, indicating that such fall from 117.87 should have completed already and further rebound could be seen towards this high.
At this point, intraday bias remains on the upside as long as USD/JPY stays above 116.41 minor support. But a firm break above is needed to confirm rise from 113.39 has resumed, otherwise, further choppy trading will likely follow with risk of another fall. Below 116.41 will turn intraday outlook consolidative.
In a bigger picture, the whole fall from 121.38 have completed with 3 waves down to 108.99. Subsequent rise from 108.99 has made a short term top at 116.69, corrected to 113.39 and has resumed to last week’s high. At this point, as long as retreat from 117.87 is supported by 114.99 cluster support (61.8% retracement of 113.39 to 117.87 at 115.10, 55 days EMA at 114.99 too), the whole rally from 108.99 is still in progress and rise from 113.39 should resume, after completing the correction, towards 118.88 resistance.
Shing-Ip Tsui (Shing) is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.
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