The sharp rise of the Yen highlighted Monday’s session on forex markets, and yesterday’s trend continued today in early trading as the Japanese currency gained ground on all of its major counterparts. The better than expected Japanese Trade Balance data and the disappointing end of the G20 meeting both lifted the safe-haven currency. Most of the other major currencies traded in a narrow range before Wednesday’s crucial Fed meeting.

Oil fell again on Monday and it decisively broke below a key support at $44 after trending lower for more than a month now. Precious metals also had a quiet session but they edged higher together with the Yen, with silver being the stronger of the two yesterday. Commodity currencies are surprisingly strong this morning, as the New Zealand Dollar and the Australian Dollar both trade significantly higher than the USD in early trading.

GBP/JPY (current price: 136.84)

The pair got slightly lower yesterday and it added to its losses this morning, trading at the lowest level in two weeks below 137. The cross is now more than 600 pips below its post-Brexit highs, as the Pound got weaker compared to most of its peers and the Yen also corrected on the upside in the last few days. The low below 130 is still far away, but the declining 200-day MA is even further, at 164 currently, thanks to the strong and declining long-term trend.

Our assessment: The cross collapsed by 35% in only a year, and the bearish trend is still intact with the Pound falling back to the lower boundary of the dominant trend channel in during this morning’s session.

USD/CAD (current price: 1.3194)

The Canadian Dollar is back to the all-important 1.32 level before the Fed meeting as the pair got pushed higher by the weakness of oil and other commodities, as well as the broad strength of the U.S. Dollar. The Bank of Canada also pointed out the international worries in the bank’s previous monetary statement, helping the cross in getting back to the top if recent trading range. All eyes will probably be focused on oil and the Fed again this week, as the Black Gold might remain the number on influence on the path of the pair.

Our assessment: USD/CAD is close to breaking out on the upside from its dominant trading range between 1.2650 and 1.32, and further weakness in oil might push it as high as 1.335 in the near future.

EUR/USD (current price: 1.0950)

The most traded pair rebounded above the crucial 1.10 level this morning, as global risk assets mostly ignored the rise of the Yen and got a bit higher in early trading. Investors are seemingly more cautious towards the Dollar following the strong rally in the currency last week, as some think that the Fed will remain dovish despite the relatively favorable U.S. economic data, because of the still present international worries regarding the Brexit and China.

Our assessment: EUR/USD still trades in a narrow range between 1.09 and 1.115 since the Brexit vote, but a surprise from the Fed might cause a meaningful move later on this week. EUR/USD in a neutral

WTI Crude Oil (current price: $19.51)     

Oil continued its correction on the last two days as we expected and it violated the key $44 support/resistance level yesterday. The crucial commodity trades in a declining short-term trend channel just above the flat 200-day MA currently at 41.25. The lower boundary of the channel looms around $42, as oil finally cleared the overbought readings on the momentum indicators after four months of relentless advance.

Our assessment: Oil might still drop before the current correction ends, but the commodity is already 17% below its previous high, and multiple strong support levels are found near the current rice.

Economic Releases

The U.S. Dollar will be in focus today regarding economic new, as several releases will come out on the U.S. housing market and state of the services economy. The CB Consumer Confidence Index is probably the most anticipated number, but New Home Sales and the Case-Schiller Housing Price Index also have the potential to move the currency. The Richmond Manufacturing Index and the U.S. Service PMIwill be published during the afternoon after an eventless morning session.