USDJPY Boundary At 106.30 - Aussie Hit by RBA Dovish Minutes
The US Dollar remains relatively strong against its counterparties on Tuesday morning. Equities have been flat to slightly positive in US. In Asia, NIKKEI 225, closed up by 1.23% and European futures indicated for a calm start at around the same levels. There is a mild risk aversion but that does not reflect much on the Forex market. The Yen has been losing ground the previous week against the US Dollar while today this course has reversed. The Japanese Yen gained against the British pound today as Japan’s Softbank has agreed to acquire ARM Holdings, the largest tech company by market value listed in London Stock Exchange. The US Dollar had a series of surprisingly positive news the previous week with the US Dollar index peaking at resistance at 96.84 and then extending in sideways. Today watch for the US Building Permits and Housing Starts.
The USDJPY seems that has found its upside boundary at 106.30 and there was a mild correction down to 105.62. The currency pair overall is in a range trading formation up to now this week. Market participants expect for stimulus by end of month and that could keep them on sidelines for some time. Japan is coming back today from yesterday holiday, there are not major news this week expected. The Yen is likely to be driven by the broader risk sentiment of the market, which is relatively steady for the time being.
The GBPJPY technicals suggest that there will be bullish continuation amid hourly symmetrical triangle formation. However, we remain cautious as this could be the reversal point of the retracement. Should, we see any downside breach of the symmetrical triangle that could indicate an early falling revive.
The GBPUSD is on its way to form at Head and Shoulders formation. The headline is seen at 1.3106 and should that is breached we would expect declining bias to strengthen. The pound was supported by previous week decision of BoE not to ease and by the Softbank-ARM acquisition, nevertheless, central bank Chief economist talked about a must-aggressive-August monetary enhancement. We sustain bearish expectation for the GBPUSD, and a break of the 1.3106 would place in target the low at 1.2853. Today watch for the UK Inflation data releases.
The AUDUSD has revived its downside after the release of the RBA meeting minutes. The uptrend line has been breached at 0.7557 and prices dived to a more than a week low at 0.7505. The central bank indicated that the door is open for further rate cut, but that will be in function of the inflation data to be released on July 27.