USD/JPY Edging towards Decade Low

Written by Anthony Darvall

U.S. Dollar Trading (USD) was unable to gain even as stocks fell slightly as the market digested weak US data. June Pending home Sales fell -2.6% and Personal spending and income both came in flat at 0.0% m/m. In US stocks, DJIA -38 points closing at 10636, S&P -5.4 points closing at 1120 and NASDAQ -11 points closing at 2283. Looking ahead, July ISM Services forecast at 53 vs. 53.8 previously. July ADP National Employment forecast at 40k v. 13k previously.

The Euro (EUR) took another leg higher as the market focused on USD weakness and the Euro as the world's secondary reserve currency. June PPI increased 0.3% vs. 0.4% previously. EUR/JPY struggled as the Yen also benefited from the USD woes. EUR/USD traded with a low of 1.3146 and a high of 1.3264 before closing at 1.3230. Looking ahead, July EU PMI Services forecast at 56 vs. 56 previously.

The Japanese Yen (JPY) was strong against the USD breaking below Y86 in the European session on market talk the FED may increase the Quantitative easing program as the US recovery falters. Traders note that the low from last year Y84.83 could act as a line in the sand where the Japanese Government may get involved to cap the recent strength. Overall the USDJPY traded with a low of 85.66 and a high of 86.63 before closing the day around 85.80 in the New York session.

The Sterling (GBP) consolidated recent gains but was unable to push above the key 1.6000 psychological level as the market recovers from overbought conditions. July UK Construction PMI fell 4.3 to 54.1 previously. Overall the GBP/USD traded with a low of 1.5859 and a high of 1.5971 before closing the day at 1.5940 in the New York session. July Halifax House Prices forecast at -0.3% vs. -0.6%.

The Australian Dollar (AUD) in a big day for Australian data the market finished roughly unchanged as some weaker than expected Retail sales was offset from an upbeat RBA assessment of the Global economy. June Retail Sales were at 0.2% vs. 0.3% forecast and the RBA held at 4.5% as expected. Overall the AUD/USD traded with a low of 0.9069 and a high of 0.9151 before closing the US session at 0.9130. Update June Trade Balance at 3.54bn vs. 1.65bn previously.

Oil & Gold (XAU) Gold pushed higher on the US Fed quantitative easing talk which helped the alternative investment. Overall trading with a low of USD$1179 and high of USD $1191 before ending the New York session at USD$1186 an ounce. Crude continued with its uptrend up over $1 a barrel. WTI Oil Closed +$1.30 at $82.40 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.27091.29521.32201.34161.3692
USD/JPY83.5084.8385.5086.6688.12
GBP/USD1.54001.56961.59401.60691.6276
AUD/USD0.87380.88960.91400.92730.9389
XAU/USD1146.001157119312041218.00
OIL/USD78.0080.0082.4082.5085.00

Euro - 1.3220

Initial support at 1.2952 (July 27 low) followed by 1.2709 (July 15 low). Initial resistance is now located at 1.3416 (April 27 high) followed by 1.3692 (April 12 high)

Yen - 85.50

Initial support is located at 84.83 (Nov 29 2009 low) followed by 83.50 (Nov 29 2009 low). Initial resistance is now at 86.66 (August 3 high) followed by 82.12 (July 28 high).

Pound - 1.5940

Initial support at 1.5692 (August 2 low) followed by 1.5400 (July 26 low). Initial resistance is now at 1.6069 (Feb 3 high) followed by 1.6276 (Jan 28 high).

Australian Dollar - 0.9140

Initial support at 0.8896 (July 23 high) followed by the 0.8738 (July 22 high). Initial resistance is now at 0. 9273 (May 4 low) followed by 0.9389 (April 12 high).

Gold - 1193

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1204 (July 23 high) followed by 1218 (July 13 high).

Oil - 82.40

Initial support at 80.0 (Intraday Support) followed by 79.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 85.00 (Intraday Resistance).