The Japanese yen is the top performer at the close of European trade with an advance of 1.17% on the session. A strong bout of risk-aversion has propped up demand for the low yielder with the yen besting all its major counterparts early in the week. The USD/JPY reversed sharply off key resistance at March low and the May high at the 80.60 pivot level. Interim daily support rests at the 23.6% Fibonacci extension taken from the February and June lows at 79.60 and is backed by the 20-day moving average at 79.25 and channel support, currently around the 79-figure. We maintain our medium-term bullish bias on the pair with the pullback offering favorable entries between the 200-day moving average (currently 78.84) and the 23.6% extension. Note that the pair is likely to remain under pressure so long as market sentiment remains on the defensive with only a break below June 15th low at 78.62 invalidating our current setup. Daily RSI has now rebounded off the 60-mark, suggesting that the oscillator may look for another bounce off former RSI resistance before resuming higher.
The scalp chart shows the USD/JPY holding within the confines of an ascending channel formation with the pair currently trading just below the 50% Fibonacci extension taken from the June 1st and 15th troughs at 79.65. Interim support now rests at the 38.2% extension at 79.40 backed by the confluence of channel support and the 23.6% extension at 79.10. A break below this level risks a more substantial correction with such a scenario eyeing soft support and 78.85 and the June 15th low at 78.60. A breach above the 50% extension eyes topside targets at the 61.8% extension at 79.90, the 78.6% extension at 80.28 and the Sunday open high at 80.60.
Key Levels/Indicators
|
Level/Indicator |
Level |
|
200-Day SMA |
78.84 |
|
100-Day SMA |
80.50 |
|
50-Day SMA |
79.83 |
|
2012 JPY HIGH |
76.03 |
The Australian dollar is the weakest performer against a stronger greenback with a loss of more than 0.79% in early US trade as risk-off flows continue to weigh on the high yielder. The AUD/USD pulled away from daily resistance at the 38.2% Fibonacci retracement taken from the late February to June decline with a break below last week’s low at 1.0010 exposing key daily support targets at the confluence of the December low and the 23.6% retracement at 9880. A Fibonacci extension (not depicted in the chart above) taken form the April 30th and June 20th crests, further highlights the 9880-level (38.2% extension) and this target will now act as our primary objective for the aussie. A breach above 1.0010 risks a run on the June highs with only a breach above the 200-day moving average invalidating our directional bias.
The scalp chart shows the AUD/USD trading just above interim support at the 38.2% Fibonacci retracement taken for the June advance at 9975. Subsequent support targets are eyed at 9930, the 50% retracement at the 99-figure and the key support previously mentioned at 9880. An RSI break above trendline resistance coupled with a breach above trendline resistance dating back to the 21st in price action, eyes topside resistance levels at 1.0025, the 23.6% retracement at 1.0070, and 1.0130. We continue to favor the short-side in the aussie while noting that a strong improvement in risk appetite would likely limit losses in the interim.
Key Levels/Indicators
|
Level/Indicator |
Level |
|
200-Day SMA |
1.0250 |
|
100-Day SMA |
1.0304 |
|
50-Day SMA |
1.0050 |
|
2012 AUD LOW |
0.9582 |
