Dollar retreats mildly as the week starts to digest Friday's sharp gain. But after all, downside is limited so far as the greenback is supported by mild weakness in commodities with crude oil hovering around 70 level while gold stays sold below 960. Asian stocks are broadly higher following strength in US but provide little inspiration to currency markets so far. The economic calendar is light today and dollar will likely consolidate further for a while before resuming the current rally.

Japanese current account rose more than expected to 1.8T JPY in June. Machine orders rose more than expected by 2.7% mom in June. Economic watcher sentiment rose slightly to 42.4 in July but fell short of expectation of 43.4. Looking ahead, Eurozone Sentix investor confidence is expected to improve from -31.3 to -25.8.

Looking at dollar index, intraday bias remains on the upside as long as 78.54 minor support holds. As discussed before, recent development argues that the whole five wave sequence from March high of 89.62 might have completed at 77.43 already. Break of 79.66 resistance will solidify this case and target 81.47 resistance for confirmation. On the downside, below 78.55 minor support will turn intraday outlook neutral first but downside should be contained above 77.81 support and bring rally resumption.

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Also, as noted before, commodity currencies are relatively firmer in last Friday's sharp dollar rally. Indeed, such relative strength against european currencies can be seen in EUR/AUD chart. The cross has currently resuming the whole down trend from Oct 08 high of 2.1127. Short term outlook will remain bearish as long as 1.7201 resistance holds and current fall will probably extend towards 1.6045 support before stabilizing.

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USD/JPY Daily Outlook

Daily Pivots: (S1) 95.81; (P) 96.79; (R1) 98.54;

At this point, intraday bias in USD/JPY remains on the upside with 96.78 minor support intact. As discussed before, the decisive break of short term falling channel resistance indicates that fall from 101.43 has completed with three waves down to 91.73 already. Further rise should be seen to 98.87 resistance first and break there will confirm this case and target 101.43 high next. On the downside, below 96.78 minor support will turn intraday outlook neutral first and bring consolidation. But downside should be contained above 95.05 support and bring rally resumption.

In the bigger picture, as mentioned before, fall from 101.43 should have completed at 91.73 already. The three wave corrective structure in turn indicates it's merely a correction to whole rally from 87.12. Indeed, rise from 91.73 is tentatively treated as resumption of such medium term rise. Sustained break of 101.43 resistance will confirm this case and target 100% projection of 87.12 to 101.43 from 91.73 at 106.04 next. On the downside, below 95.05 will dampen this bullish view and turn outlook mixed.

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