Yen crosses are regaining strength today following another day of rally in Asian stocks. As mentioned before, some resistance was seen in yen crosses earlier after hitting fibonacci resistance levels, in particular in EUR/JPY and GBP/JPY but the retreat was shallow and the crosses building up momentum to resume recent rise. Dollar is back under pressure against commodity currencies but remain steady against Euro so far, which keeps the dollar index soft without sending it lower yet. We'd remain short term bearish in dollar and yen but continue to be alert of an earlier than expected reversal signal.
Looking at the dollar index, it turned into sideway consolidation after hitting 100% projection of 81.47 to 79.19 from 80.89 at 78.61. While some more sideway trading might be seen, we'd expect recovery to be limited by 79.66 resistance and bring fall resumption. The current decline is treated as the fifth leg of the whole five wave sequence from 89.62 and is expected to extend to below 78.33 low, with prospect of a marginal breach of 77.69 key support. But after all we'd expect strong support in 75.89/77.69 support zone to finally conclude the whole fall from 89.62.
Economic calendar is rather light today. Main focus in European session is UK retail sales which is expected to rebound by rising 0.3% mom, 2.1% yoy in June. Jobless claims in US is expected rise to 555k but remain below 600k. Existing home sales is expected to improve slightly to 4.8m annualized rate in June. BoC will also release Monetary Policy Report today.
AUD/USD's rally resumes by taking out 0.8192 and reaches as high as 0.8211 so far. At this point, intraday bias remains on the upside as long as 0.8089 minor support holds. Current rise from 0.7702 is tentatively treated as resumption of medium term rally and is expected to test 0.8262 high first. Break will confirm this case and target 61.8% retracement of 0.9849 to 0.6008 at 0.8382 next. On the downside, considering lost of upside momentum seen in 4 hours MACD, below 0.8089 will suggest that a short term top is formed and deeper pull back might then be seen before resuming rise from 0.7702.
In the bigger picture, there is no change in the broader view that price actions from 0.6008 are correction to down trend form 0.9849 only. Rise from 0.6284 is the last leg and should be near to completion. While another rise might be seen, upside is expected to be limited by 0.8382/8519 resistance zone (61.8% retracement of 0.9849 to 0.6008 at 0.8382) and finally bring reversal. On the downside, below 0.7702 support will now be an important alert that AUD/USD has topped out and will turn short term outlook bearish for deeper decline.
Economic Indicators Update
|23:50||JPY||Trade Balance (JPY) Jun||0.44T||0.51T||0.22T||0.31T|
|8:00||EUR||Eurozone Current Account (EUR) May||-3.6B||-5.9B|
|8:30||GBP||Retail Sales M/M Jun||0.30%||-0.60%|
|8:30||GBP||Retail Sales Y/Y Jun||2.10%||-1.60%|
|12:30||USD||Initial Jobless Claims||555K||522K|
|14:00||USD||Existing Home Sales Jun||4.80M||4.77M|
|14:30||CAD||BoC Monetary Policy Report||--||--|
|14:30||USD||Natural Gas Storage||63B||90B|