Yen strength continues
Yen’s strength continues today across the board. USD/JPY extends Friday’s fall to as low as 114.27 while EUR/JPY also weakens further to 145.74. Further speculation on Yuan appreciation as scholars and officials said that appreciation would help narrow the trade surplus, thus help controlling inflation. Yen was also supported by an overhang of JPY short positions as per IMM CTA data, and and IMF Report what suggest dollar is 15-35% overvalued. Japan industrial production came in much stronger than expected, rising 1.9% mom in Jul, fastest in seven months, versus expectation of 1.3%. Elsewhere, dollar remains steady against European currencies.
Released earlier, Jun Germany retail sales came in mixed, increasing 1.9% mom vs expectation of 1.0% but dropped 0.4% vs expectation of 0.7% increase. Later today, Eurozone business climate is expected to drop from 1.4 to 1.3 in Jul. Chicago PMI is expected to drop slightly from 56.5 to 56.
USD/JPY
Daily Pivots: (S1) 114.16; (P) 115.07; (R1) 115.55
USD/JPY’s fall extends further to as low as 114.27 so far today. At this point, as further decline is still expected to follow towards 113.39 cluster support (50% retracement of 108.99 to 117.87 at 113.43) as long as USD/JPY stays below 114.38 minor resistance. Above 114.38 will turn intraday outlook consolidative with risk of recovering to 115.28 support turned resistance or higher.
In a bigger picture, USD/JPY will still be treated as in larger sideway consolidation only as long as it’s kept above 113.39 cluster support and further rally is still in favor, from medium term point of view, towards 118.88 resistance. However, firm break below 113.39 will start to argue that the whole decline from 121.38 (which made a low with three waves down to 108.99) has resumed and medium term outlook will be turned bearish for a test of 108.99 low first.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY) here.
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.