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USD/JPY Sits at Former Support (101.80-102.00); Lower-High in Place?

USD/JPY Sits at Former Support (101.80-102.00); Lower-High in Place?

2014-07-28 16:30:00
David Song, Currency Strategist
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Talking Points:

- USD/JPY Holds at Resistance; Downward Trending Channel Remains in Play

- USD/CAD Coming Up Against Former Support; Need Break & Close Above

- USDOLLAR Remains at Risk of Near-Term Top as It Struggles to Hold Above 10,470

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10467.75

10479.14

10464.67

-0.07

59.14%

USD/JPY:

  • Trades back within the downward trending channel from June after failing to break above near-term resistance (101.80-102.00).
  • Will keep a close eye on market sentiment amid geopolitical risks, U.S. earning season & month-end flows.
  • Bank of Japan (BoJ) widely expected to retain its current policy at the August 8 meeting; may heighten appeal of the JPY as market participants push back bets for a further expansion of the asset-purchase program.

USD/CAD:

  • May resume the advance carried over from 2013 as price & the Relative Strength Index (RSI) break out of near-term downward trend.
  • Bank of Canada (BoC) Governor Stephen Poloz looks poised to retain the current policy throughout 2014 as the central bank head retains a dovish outlook for inflation.
  • Need break & close above former support (1.0820-30) to favor topside objectives.

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USD/JPY Sits at Former Support (101.80-102.00); Lower-High in Place?

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Read More:

Price & Time: Key Couple of Days for USD/CAD

GBP/USD to Carve Higher-Low on Dovish FOMC

USDOLLAR Daily

USD/JPY Sits at Former Support (101.80-102.00); Lower-High in Place?

Chart - Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

  • Lack of momentum to hold above the 10,470 to highlight topping process; lower-high in place for Dow Jones-FXCM U.S. Dollar Index?
  • Still need a bearish break in the Relative Strength Index (RSI) for conviction/confirmation for further USD weakness.
  • Given mixed batch of U.S. data, seems like we will get more of the same from the Federal Open Market Committee (FOMC) as Chair Janet Yellen retains a dovish tone for monetary policy.
  • Interim Resistance: 10,508 (61.8% retracement) to 10,524 (38.2% retracement)
  • Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)

Release

GMT

Expected

Actual

Markit Purchasing Manager Index Services (JUL P)

13:45

59.8

51.0

Markit Purchasing Manager Index Composite (JUL P)

13:45

--

60.9

Pending Home Sales (MoM) (JUN)

14:00

0.5%

-1.1%

Pending Home Sales (YoY) (JUN)

14:00

-5.2%

-4.5%

Dallas Fed Manufacturing Activity (JUL)

14:30

12.8

12.7

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--- Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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