It’s been an extremely volatile day, with gold placing it’s 6 years high, crossing the psychological trading level of $1,400. While the dollar index seems to head for a big weekly loss on Friday, reaching a five-month low versus the Japanese yen. Greenback also seems to fight against the single the currency euro after a dovish shift by the Federal Reserve.
Economic Event Outlook
USD/JPY – That’s How Far Japanese Yen Can Go
It’s been fierce 24 hours for the U.S. dollar. The greenback sank to its weakest level since the start of the year against peers like the Japanese Yen and Swiss Franc. While it reaped the support of European dealers to break the dollar down, it was only a matter of time that would have occurred after the Federal Reserve unveiled how close they are to easing.
USD/JPY broke the bottom of its 2-week long range and should immediately drop to at least 106.50, the 61.8% Fibonacci retracement of the June 2016 to January 2017 rally, however eventually the flash crash low near 104.75 is the primary support. The Bank of Japan also had a monetary policy meeting last night where they acknowledged mounting external forces but have no immediate plans to add accommodation.
Support and Resistance
Key Trading Level: 107.46
To allow the correction phase, the price needs to clear the resistive barrier at 107.26. In such a case, we would suggest next target at 107.57, and then any further price progress would face final resistance at 107.89.
Alternate scenario: Loss of initial support level at 107.04 would open road for a market decline towards to interim target at 106.74 and any further price weakening would then be limited to final aim at 106.43.
EUR/USD – Tripple Top Pattern In Play
On Friday, the EUR/USD pair has peaked at 1.1316, beaten by dollar’s bearish momentum following the Fed’s monetary policy announcement. The U.S. dollar sell-off had continued throughout the day, as U.S. data disappointed to impress.
In the case of EUR/USD, the pair lifted from the specified high to trade around the current 1.1280 price zone. According to preliminary estimates, EU Consumer Confidence fell to -7.2 vs. the expected -6.5 in June, as a result of increased pessimism related to economic growth.
In the United States, the Q1 Current Account, published a larger-than-expected shortage of $130.4B, while the Philadelphia Fed Manufacturing report released at 0.3 for June, well beneath the 11.0 forecast. Unemployment claims for the week ended June 14, on the other hand, came in better-than-expected, down to 216K.
Support and Resistance
Key Trading Level: 1.1291
EURUSD could surge to test next resistance area of 1.1317, keeping the continuous ascending formation intact. The break here is needed for the EUR/USD prices to lead to towards subsequent mark at 1.1352. Any additional surge would then be limited to 1.1387.
Alternative Scenario: I’m not expecting corrective action today, however price regress below the initial support at 1.1282 would suggest next interim target at 1.1247 on the way towards to final aim for today at 1.1212.