Market Beat: Yen Falls Further as Dollar Consolidates.
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This article is originally referred from Daily FXGlobe.
The Japanese Yen declined yet again following a day of gains, as the speculation regarding the next phase of Prime Minister Abe’s economic program continued. The number one safe haven currency has been dropping throughout last week compared to its major peers, as traders think that there is a better chance of succeeding for the Bank of Japan to stop the unwanted appreciation of the Yen. The Great British pound was the strongest major on Monday as volatile trading continued in the currency.
The U.S. Dollar lost some ground compared to its major counterparts yesterday, after having a strong session on Friday in reaction to another round of encouraging economic releases. Commodities had a mixed, but generally weaker session, as oil fell again, while precious metals traded sideways, with silver actually finishing in the red. Oil trades lower today in early trading as well, weighing on commodity currencies, especially the New Zealand Dollar and the Aussie.
GBP/USD (current price: 1.3225)
Cable is trading higher again this morning after strongly bouncing off the key resistance level near 1.3550 towards the end of last week. The pair has been in the center of attention in the past couple of month, and volatility remains elevated, as the future of the British economy is uncertain, and the Bank of England might pursue aggressive monetary policies to help growth later on this year. MPC member Weale expressed further concerns about the confidence of businesses and consumers yesterday, but the Pound still rose against the struggling Dollar.
Our assessment: The 1.30 and the 1.3550 level might still be the most significant ones for the pair this week, as the Pound will probably stay choppy because of the questionable economic outlook.
USD/JPY (current price: 106.08)
The Yen continued to be weak compared to its most important peer as the pair drifted higher again on Monday, back above the crucial resistance level at 105.50. The strong rally last week propelled the cross near the upper resistance line of the declining long-term trend channel, and it will be interesting to see if the momentum will continue near the strong 107.50 level as well. The U.S. NAHB Index came in slightly lower than expected, and the negative housing data pushed the Dollar somewhat lower, but the pair still finished near its session highs.
Our assessment: The pair now gained 600 pips in two-weeks, but the declining long-term trend is still intact with the falling 200-day MA looming near the 113.25 level above the current rate.
NZD/USD (current price: 0.7032)
The New Zealand Dollar is trading sharply lower today, as the RBA released the minutes from the previous monetary policy meeting, and the central bank revealed a surprisingly dovish stance. The Australian Dollar and the Kiwi both got hit hard following the announcement, and the NZD is now negative for the fifth day in a row compared to the USD. The pair got close to the 0.70 support zone this morning, after declining more than 1%, adding to the 300-pip correction of last week.
Our assessment: NZD/USD is still well above the rising 200-day MA, currently at 0.68, and the pair is supported by multiple levels between 0.70 and 0.68 despite the recent negative trend.
Gold (current price: $1328.50) and Silver (current price: $19.95)
The strong rally in risk-on assets last week weighed heavily on precious metals, and the weakness of the Yen also hurt them, as safe haven buying took a backseat. Gold held up relatively well, as the decline of the Dollar helped the Shiny Metal, but silver fell below the all-important $20 level today in early trading following a negative session on Monday. The technical picture still shows an uptrend for both metals, but the current correction might continue especially if global stock markets continue their advance.
Our assessment: Gold is consolidating below the key $1350 level, after reaching as high as 1380 following the Brexit vote. The metal is still among the best performing assets of the year, as it is up by almost 30%.
Forex markets a busier day today after yesterday’s calm session, as traders will probably focus on releases from the U.S. and the U.K. The British Housing Price Index, the Retail Price Index and most importantly the Consumer Price Index will all be published today, and all three have the potential to move the Pound significantly. The Eurozone and the German ZEW Survey will also come out today in the morning, while the afternoon will be highlighted by U.S. Housing Starts and Building Permits.
Original Source: Daily FXGlobe