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Aayush Jindal

Key Highlights

  • USD/JPY is facing a strong resistance near 108.00 and 108.15.
  • There was a break below an ascending channel with support at 107.50 on the 4-hours chart.
  • GBP/USD broke the 1.2600 barrier and traded to a new monthly high above 1.2650.
  • The US Initial Jobless Claims in the week ending July 04, 2020 declined from 1,413K to 1,314K.

USD/JPY Technical Analysis

The US Dollar started a decent upward move from the 106.07 low against the Japanese Yen. However, USD/JPY failed to continue above 108.20 and recently started a fresh decline.

Looking at the 4-hours chart, the pair settled below the 108.00 level and the 200 simple moving average (green, 4-hours). It seems like the pair failed to clear the 50% Fib retracement level of the downward move from the 109.84 high to 106.07 low.

On the downside, the 107.00 support area holds the key. If there is a daily close below the 107.00 level, the pair could restart its decline. In the mentioned case, it could revisit the 106.20 and 106.00 support levels.

Any further losses may perhaps open the doors for a larger decline towards the 105.50 and 105.00 levels. Conversely, the pair must gain strength above 108.00 and 108.20 to start a strong increase towards the 108.00 and 109.00 levels.

Fundamentally, the US Initial Jobless Claims figure in the week ending July 04, 2020 was released by the US Department of Labor. The market was looking for a decline from 1,427K to 1,375K.

The actual result was positive, as there was a decrease in claims to 1,314K. The last reading was also revised down from 1,427K to 1,413K.

The report added:

The 4-week moving average was 1,437,250, a decrease of 63,000 from the previous week's revised average. The previous week's average was revised down by 3,500 from 1,503,750 to 1,500,250.

Overall, USD/JPY is showing bearish signs and it could continue lower unless there is a clear break above 108.00. Looking at GBP/USD, there was a sharp upward move above 1.2600 and 1.2650.

Upcoming Economic Releases

  • US Producer Price Index June 2020 (MoM) – Forecast +0.4%, versus +0.4% previous.
  • US Producer Price Index June 2020 (YoY) – Forecast -0.2%, versus -0.8% previous.
  • Canada’s Net Change in Employment June 2020 – Forecast 700K, versus 289.6K previous.
  • Canada’s Unemployment Rate June 2020 - Forecast 12%, versus 13.7% previous.