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Forex Market Snapshot
The dollar seems set to end the week on the defensive as it trades lower ahead of the US open. US bond yields have steadied and stocks are up but talk the U.S. fiscal position, with the total deficit surpassing $40 trillion grabbing headlines and rising, is acting as a weight on the dollar.
- AUD and NZD outperforming,
- USDJPY is weaker after completing a 61.8% retracement (159.11) but is still above 158
- GBPUSD has extended its high, marginally so far, through a 1.3658 target
- EURUSD retested its 1.1710 high, holding so far
- USDCAD extended its low but so far holding above 1.3730 support
USDJPY 4 HOUR: Confounding
Bounce off (just above) 158.00 and a higher low confounding the general bearish USD trend.
Charts show little until 159.77 other than 159.105 = 61.8% so look for 159.00 to be pivotal.
No apparent catalyst other than the uptick in US yields and weak JPY crosses (vs. Gold and Crypto as well).
Forex Market Snapshot
Crude oil holding firm and long dated Treasury yields near multi-decade highs amid US-Iran uncertainty have set a risk off mood, This has seen the dollar trade on the firmer side akthough so far with limnited follow through.
NZD is underperforming while USDJPY too a step closer to 160 (High 159.78) but no further given the risk of a BoJ ambush.
USDJPY 1 HOUR: Wary of the BoJ
Trend: Mixed (short up, long term down)
Momentum: Mixed
Traders will be on BoJ intervention alert between 159.50-00 even though key chart resistance is not until 160-161 with 160.53 = 61.8%
Barring a BoJ ambush, expect support below the market while trade is above 158.85
USDJPY 1 HOUR – Yields confound
Trend: Down Momentum: Stalled?
Bounce in US yields despite weaker US data confounding the bears and has lifted USDJPY. USDJPY bounce from a pause above 158.57 would need to establish above 159.50 to put 160 and a BoJ alert in play.
Elsewhere EURUSD failed to hold a break of 1.1581 and GBPUSD failed to hold its 1.3550 break.
US yields ticking up after front running lower ahead of data (2 year yield now close to unchanged on the day, 10 year up)
Seeing some modest correlations with USD following (cautiously as there should be limit on yields upside and market more sensitive to a dip than a blip).
Next data: U if M Consumer Sentiment
Addendum: Brief USD blip setup a fresh run to downside… EURUSD testing its 1.1581 August range top. GBPUSD testing 1.3550+. AUD and CAD extending highs. USDJPY lower on the day but still above 158.42-57 support.
USDJPY 4 HOUR: Perfect storm?
Trend: Down Momentum: Long term down, short-term up
If you are bearish on the USD you cannot ask for a more perfect storm: weak jobs report, tame CPI and PPI, Fed rate hikes being priced out, BoJ rate hike being priced in, yet the USD has stayed resilient in the face of it. While talk will be that the BoJ/MoF do not want to see USDJPY back above 160, the key level that would raise alarms is 160.53 = key resistance and also the 61.8% FIBO (and 160.87). Key supports: 158.42-57
Market Update: Forex
USD trading soft but so far with limited follow through as it seems to be following a dip in US yields, specifcally the shorter-end despite CPI coming in as per the consensus. Ranges/key levels are still intact with ones to watch:
- EURUSD 1.1580 (top of range) and 1.,1550 as a market pivoit
- USDJPY 158.42 recent low)
- GBPPUSD 1.3550 (next target)
USDJPY plateaued after its swift pivot above its 200-day EMA reached the 159.30 region earlier this week. Unless US and Japanese officials intervene again to support📉 the yen, the pair could extend its recovery phase, which started at the lower boundary of a bullish📈 channel. Yet, for a more sustainable rally traders may seek a confirmation signal 📈above the psychological 160 level
GBPUSD 4 HOUR: Watch 1.35
Looking to establish 1.3500, which traded today for the 4th day in a row, as support to build momentum for a run at a 1.3550 target.
So far, a 1.3530 double top stands in the way.
Note a softer EURGBP is currently providing some support for GBPUSD while keeping a cap on EURUSD.
GBPCHF (firmer) has been an outperformer, perhaps reflecting some switching in funding currencies from JPY (USDJPY has dipped) to CHF.,
Forex Market Snapshot
The dollar is trading firmer as oil prices and bond yields both rose further overnight.
MOves, however, have been modest despite hopes for the STrait reopening fading and the fallout from the weasker NFP report dissip[ated.
EURUSD is bac trading just below the 1.1540 midpoint of its 1.1500-80 rnage, USDJPY is holding 159+ but wary of a BoJK ambush anmd GBPUSD is pivioting 1.35 afdter trying for a mini breakouit yesterday.
USDJPY 4 HOUR: Path of least resistance
Trend: Down but losing momentum
Momentum: Retracement
Markets follow the path of least resistance and in this case, selling JPY on its crosses run less of a risk of triggering BoJ intervention.
Meanwhile, the BoJ is looking at the same levels on a chart as we are, which in this case there is no key resistance until above 160, likely the level the central bank does not see sustained trading above it.
Only levels worth noting are retracements using
FIBOS for 163.98-155.22 at: :
- 158.57 = 38.2% (completed)
- 159.50 = 50% (open)
- 160.53 = 61.8% (open)
USDJPY DAILY: – BoJ’s dilemma’
Trend: Down
Momentum: Retracing
Little in the way of resistance between 158-160 other than FIBO levels (see below), where the 38,2% level was tested and held at the high so far today.
On the downside, 158 is pivotal (also around the 200 day mva broken on the upside yesterday.
FIBOS for 163.98-155.22 at: :
158.57 = 38.2%
159.50 = 50%
160.53 = 61.8%
BoJ likely lurking but may be satisfied with 155-160.
Forex Market SNapshot
Globalo markets, in general, have traded quiet sessions awaiting the release of the US July jobs report.
This includes forex with the dollar not following through on nyesterday’s firmer close. CHF is a moidest outperformer while USDJPY remains above 158.
One exception is GOLD, which has bounced off support to extend this week’s sharp rally above 4300, marginally so far.
Regarding the US jobs report, while there is likely to be typical volatility following its release, a stable employment picture has the Fed’s attention more on the inflation side of its dual mandate.
USDJPY 4 HOUR: – BoJ’s dilemma’
Break above 158 (200 day mva) poses a dilemma for the BoJ. If it intervenes and USDJPY does not break 155.00-22, the move will be met with buying. If it stands aside, then it risks a move back towards 160. So let’s see what the BoJ is looking at with no obvious resistance until above 160. In the absence of the BoJ, which still looms as a risk above the market, USDJPY has settled in a 157.21-157.95. FIBOS for 163.98-155.22 at: :
- 158.57 = 38.2%
- 159.50 = 50%
- 160.53 = 61.8%
USDJPY 1 HOUR: – BoJ looms
In the absence of the BoJ, which still looms as a risk above the market, USDJPY has settled in a 157.21-157.95, which seems too tight to last for too long.
On top, the 200-day mva (157.98) remains an obstacle while the low at 155.22 is distant.
Worth noting is that US Treasury Secretary Bessent, while supporting BoJ intervention for fear that JPY weakness would spill over to other currencies, said that he favored a stable JPY. In this regard, 150-160 or perhaps 155-160 would be considered a stable range.
Forex Market Snapshot
The forex market has taken a back seat to the surge in stocks, sharp drop in crude oil (although off its lows), lower bond yields and today’s spike higher in gold. This has seen the dollar trade mixed and so far in tight ranges )(NZD the underperformer)..
Worth noting is USDJPY consolidating and trying to hold a bid in the absence of BoJ intervention but remains just below 157.98 (200 day mva)
USDJPY dips on Bessent comments (but far from 155) after failing at the 200 day mva (157.95) … , suggests 158 is pivotal, last 157.45
This comment from Bessent is a clue why he supported USDJPY intervention, suggsting he does not want to see the USD firm (Fin x)
