• EUR/USD added to Tuesday’s losses below 1.0700.
• The US Dollar rose to multi-week highs, helped by yields.
• Germany’s Consumer Confidence receded in July.

The intense buying interest in the US Dollar (USD) led the USD Index (DXY) to build on Tuesday’s gains and advance to multi-week highs past the 106.00 barrier on Wednesday, exerting notable pressure on risk-sensitive assets and sending EUR/USD to fresh monthly lows near 1.0660.

The negative sentiment around the euro (EUR) persisted despite decreasing political concerns in France ahead of the June 30 snap elections, while hawkish Fedspeak and the widening gap in monetary policy between the Fed and its major peers collaborated with the move lower.

Furthermore, the macroeconomic scenario remained unchanged on both sides of the Atlantic, with the European Central Bank (ECB) still considering further rate cuts beyond the summer, while market bets suggested two more rate cuts later in the year.

In contrast, market participants continued to debate between one or two rate cuts by the Federal Reserve (Fed) this year, even though the Fed had already forecasted just one cut, likely in December.

Once again, FOMC Governor Michelle Bowman repeated on Wednesday that her basic assessment is that inflation will fall further if the policy rate remains unchanged and that rate decreases will be necessary if inflation gets stably towards 2%.

From the ECB, Finnish policymaker Olli Rehn predicted bumpy inflation in the bloc, but this is expected, while data suggests price growth will meet the 2% target. Additionally, Board member Fabio Panetta suggested the ECB could gradually reduce interest rates as inflation falls, while ECB Chief Economist Philip Lane projected continued interest rate cuts if price pressures ease but may slow down in case of unexpected surprises.

The CME Group’s FedWatch Tool now indicates nearly a 63% probability of lower interest rates in September and around 93% in December.

In the short term, the recent rate cut by the ECB, compared to the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the near term.

However, the Eurozone’s emerging economic recovery and perceived weakening of US fundamentals are expected to reduce this disparity, possibly providing occasional support for the pair in the near future.

EUR/USD daily chart

EUR/USD short-term technical outlook

If bears remain in control, EUR/USD may first revisit the June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and finally the 2024 bottom of 1.0601 (April 16).

Occasional bouts of strength, in the meantime, could put the pair on track to revisit the 200-day SMA at 1.0789, prior to the weekly high of 1.0852 (June 12) and the June top of 1.0916 (June 4). The breakout of this level reveals the March peak of 1.0981 (March 8), which precedes the weekly high of 1.0998 (January 11) and the psychological 1.1000 yardstick.

So far, the 4-hour chart has revealed some signs of continued deterioration. The initial resistance is at 1.0746 followed by 1.0761 and 1.0802. The initial support comes in at 1.0666, ahead of 1.0649 and 1.0601. The Relative Strength Index (RSI) bounced to 39.

• EUR/USD added to Tuesday’s losses below 1.0700.
• The US Dollar rose to multi-week highs, helped by yields.
• Germany’s Consumer Confidence receded in July.

The intense buying interest in the US Dollar (USD) led the USD Index (DXY) to build on Tuesday’s gains and advance to multi-week highs past the 106.00 barrier on Wednesday, exerting notable pressure on risk-sensitive assets and sending EUR/USD to fresh monthly lows near 1.0660.

The negative sentiment around the euro (EUR) persisted despite decreasing political concerns in France ahead of the June 30 snap elections, while hawkish Fedspeak and the widening gap in monetary policy between the Fed and its major peers collaborated with the move lower.

Furthermore, the macroeconomic scenario remained unchanged on both sides of the Atlantic, with the European Central Bank (ECB) still considering further rate cuts beyond the summer, while market bets suggested two more rate cuts later in the year.

In contrast, market participants continued to debate between one or two rate cuts by the Federal Reserve (Fed) this year, even though the Fed had already forecasted just one cut, likely in December.

Once again, FOMC Governor Michelle Bowman repeated on Wednesday that her basic assessment is that inflation will fall further if the policy rate remains unchanged and that rate decreases will be necessary if inflation gets stably towards 2%.

From the ECB, Finnish policymaker Olli Rehn predicted bumpy inflation in the bloc, but this is expected, while data suggests price growth will meet the 2% target. Additionally, Board member Fabio Panetta suggested the ECB could gradually reduce interest rates as inflation falls, while ECB Chief Economist Philip Lane projected continued interest rate cuts if price pressures ease but may slow down in case of unexpected surprises.

The CME Group’s FedWatch Tool now indicates nearly a 63% probability of lower interest rates in September and around 93% in December.

In the short term, the recent rate cut by the ECB, compared to the Fed’s decision to maintain rates, has widened the policy gap between the two central banks, potentially leading to further weakness in EUR/USD in the near term.

However, the Eurozone’s emerging economic recovery and perceived weakening of US fundamentals are expected to reduce this disparity, possibly providing occasional support for the pair in the near future.

EUR/USD daily chart

EUR/USD short-term technical outlook

If bears remain in control, EUR/USD may first revisit the June low of 1.0666 (June 26), then the May low of 1.0649 (May 1), and finally the 2024 bottom of 1.0601 (April 16).

Occasional bouts of strength, in the meantime, could put the pair on track to revisit the 200-day SMA at 1.0789, prior to the weekly high of 1.0852 (June 12) and the June top of 1.0916 (June 4). The breakout of this level reveals the March peak of 1.0981 (March 8), which precedes the weekly high of 1.0998 (January 11) and the psychological 1.1000 yardstick.

So far, the 4-hour chart has revealed some signs of continued deterioration. The initial resistance is at 1.0746 followed by 1.0761 and 1.0802. The initial support comes in at 1.0666, ahead of 1.0649 and 1.0601. The Relative Strength Index (RSI) bounced to 39.

• GBP/USD edges lower after facing stiff resistance at 1.2700.
• The pair could face next support level at 1.2640.
• Technical picture highlights a bearish shift in the near-term outlook.

Following Monday’s rebound, GBP/USD tested 1.2700 on Tuesday but failed to clear this level. The pair stays under modest bearish pressure on Wednesday and an extended slide could be seen if 1.2640 support is broken.

In the absence of high-tier data the cautious market stance helped the US Dollar (USD) stay resilient against rivals. Additionally, hawkish comments from Federal Reserve (Fed) officials further supported the USD. Fed Governor Michelle Bowman said on Tuesday that they are not yet at the point where it is appropriate to cut interest rates and added she is willing to raise the target rate at a future meeting if inflation progress stalls or reverses.

In the European session on Wednesday, US stock index futures trade marginally higher. Although a bullish opening in Wall Street could limit the USD’s gains and help GBP/USD find a foot hold, the pair could have a hard time gathering bullish momentum, with investors awaiting next week’s UK election before taking large positions.

The only data featured in the US economic docket will be New Home Sales for May. Following the 4.7% decline seen in April, another significant drop in this data could highlight the negative impact of the Fed’s tight policy on the housing market and hurt the USD.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly below 50, reflecting the lack of buyer interest.

On the downside, the 100-day and the 50-day Simple Moving Averages (SMA) form strong support at 1.2640. This level is also reinforced by the Fibonacci 38.2% retracement of the latest uptrend. In case GBP/USD falls below this level and starts using it as resistance, 1.2600 (psychological level, static level) and 1.2580 (Fibonacci 50% retracement) could be seen as next bearish targets.

1.2700 (200-period SMA on the 4-hour chart) aligns as immediate resistance before 1.2730 (100-period SMA, Fibonacci 23.6% retracement) and 1.2800 (psychological level, static level).

• GBP/USD edges lower after facing stiff resistance at 1.2700.
• The pair could face next support level at 1.2640.
• Technical picture highlights a bearish shift in the near-term outlook.

Following Monday’s rebound, GBP/USD tested 1.2700 on Tuesday but failed to clear this level. The pair stays under modest bearish pressure on Wednesday and an extended slide could be seen if 1.2640 support is broken.

In the absence of high-tier data the cautious market stance helped the US Dollar (USD) stay resilient against rivals. Additionally, hawkish comments from Federal Reserve (Fed) officials further supported the USD. Fed Governor Michelle Bowman said on Tuesday that they are not yet at the point where it is appropriate to cut interest rates and added she is willing to raise the target rate at a future meeting if inflation progress stalls or reverses.

In the European session on Wednesday, US stock index futures trade marginally higher. Although a bullish opening in Wall Street could limit the USD’s gains and help GBP/USD find a foot hold, the pair could have a hard time gathering bullish momentum, with investors awaiting next week’s UK election before taking large positions.

The only data featured in the US economic docket will be New Home Sales for May. Following the 4.7% decline seen in April, another significant drop in this data could highlight the negative impact of the Fed’s tight policy on the housing market and hurt the USD.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly below 50, reflecting the lack of buyer interest.

On the downside, the 100-day and the 50-day Simple Moving Averages (SMA) form strong support at 1.2640. This level is also reinforced by the Fibonacci 38.2% retracement of the latest uptrend. In case GBP/USD falls below this level and starts using it as resistance, 1.2600 (psychological level, static level) and 1.2580 (Fibonacci 50% retracement) could be seen as next bearish targets.

1.2700 (200-period SMA on the 4-hour chart) aligns as immediate resistance before 1.2730 (100-period SMA, Fibonacci 23.6% retracement) and 1.2800 (psychological level, static level).

• The dollar rose on Tuesday after Fed policymakers maintained a cautious tone.
• Fed’s Lisa Cook rate cuts would depend on incoming data.
• The BoJ is under a lot of pressure to raise rates due to the yen’s weakness.

The USD/JPY forecast points North as a surge in the dollar puts the yen at the $160 level that triggered a BoJ intervention in April. Consequently, there is a lot of caution in the market as investors fear another intervention.

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The dollar rose Tuesday after Fed policymakers kept cautious and failed to provide clear guidance on the central bank’s rate-cut outlook. Fed’s Lisa Cook noted that the central bank was on track to cut rates, but it would all depend on incoming data. Therefore, she failed to provide a clear timing for the first rate cut.

Policymakers remain hesitant to assume a more dovish tone as they await more data. This is to avoid making the same mistake they made last year. Although inflation had started a downtrend, it reversed, and they had to change their outlook completely.

The next report that might give more evidence of the state of inflation is the PCE price index. Forecasts show further easing, which would support Fed rate cut expectations. Such an outcome would further weigh on the yen.

Meanwhile, Bank of Japan policymakers have given hawkish signals in the past week, raising the possibility of a rate hike in July. The central bank is under a lot of pressure to raise rates due to the yen’s weakness. A weak currency pushes up import costs which drives inflation higher. A hike in July would have a big impact as it would coincide with plans to reduce bond purchases.

USD/JPY key events today

USD/JPY technical forecast: Bulls show exhaustion at the 160.00 resistance

On the technical side, the USD/JPY price has continued its rally past the 1.618 Fib extension level. Moreover, the price has stayed above the 30-SMA, showing bulls are in the lead. However, the RSI has made a bearish divergence that could lead to a reversal.

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The divergence indicates fading bullish momentum as the price trades near the 160.00 key resistance level. Therefore, there might be a pullback to retest the 30-SMA support. A deeper pullback would retest the 157.75 support level. However, if bulls regain momentum, the price might breach the 160.00 level to make a new high.

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EUR/USD Current price: 1.0687

• European Central Bank officials hit the wires, maintained the cautious stance.
• Stock markets trade mixed, a bounce in the tech sector limits panic selling.
• EUR/USD bearish case gains traction after the pair pierced the 1.0700 mark.

The US Dollar extends gains on Wednesday against most major rivals, pushing EUR/USD below the 1.0700 mark. Without relevant macroeconomic data in the way, market players keep an eye on stock markets and comments from central bank officials.

As for stocks, Asian shares advanced amid a bounce in the tech sector, led by NVIDIA, which halted a three-day slump. However, European indexes were unable to follow the lead and trade in the red. Wall Street futures trade mixed, with the DJIA still under pressure but the Nasdaq Composite and the S&P500 advancing amid gains in the aforementioned sector.

Regarding policymakers, Flavio Panetta, Governor of the Bank of Italy and member of the European Central Bank (ECB) Governing Council, said that officials are at a turning point in the monetary policy cycle. He added ECB officials should avoid “even casual” forward guidance on the timing of rate moves and cooled down concerns about stubbornly high service inflation, noting it is not abnormal. Finally, Panetta states that the economic environment is consistent with a normalisation of the monetary stance.

 ECB Chief Economist Philip Lane was also on the wires and said that the overall transmission of monetary policy has been robust and, if anything, stronger than in previous cycles. Overall, ECB officials maintained a cautiously hawkish stance and failed to trigger relevant moves around the Euro.

Data-wise, Germany published the GfK Survey, which showed Consumer Confidence contracted to -21.8 in July from -21 previously, also missing expectations of -18.9. The American session will bring United States (US) May New Home Sales and the result of the latest Federal Reserve (Fed) System Bank Stress Test.

EUR/USD short-term technical outlook

The EUR/USD pair slowly but steadily approaches the June monthly low at 1.0667, the immediate support level. Technical readings in the daily chart support a downward extension, as the pair sild further below all its moving averages, with the 20 Simple Moving Average (SMA) accelerating lower below directionless 100 and 200 SMAs. At the same time, technical indicators turned firmly lower within negative levels, reflecting sellers’ strength.

The 4-hour chart shows sellers are aligned around a mildly bearish 20 SMA, currently at 1.0709, while the 100 SMA gains downward strength far above the shorter one. Finally, the Momentum indicator aims marginally lower around its 100 level, not enough to confirm another leg south, while the Relative Strength Index (RSI) indicator also shows moderated bearish strength, although at around the 38 level, skewing the risk to the downside.

 Support levels: 1.0665 1.0620 1.0580

Resistance levels: 1.0710 1.0750 1.0800  

EUR/USD Current price: 1.0687

• European Central Bank officials hit the wires, maintained the cautious stance.
• Stock markets trade mixed, a bounce in the tech sector limits panic selling.
• EUR/USD bearish case gains traction after the pair pierced the 1.0700 mark.

The US Dollar extends gains on Wednesday against most major rivals, pushing EUR/USD below the 1.0700 mark. Without relevant macroeconomic data in the way, market players keep an eye on stock markets and comments from central bank officials.

As for stocks, Asian shares advanced amid a bounce in the tech sector, led by NVIDIA, which halted a three-day slump. However, European indexes were unable to follow the lead and trade in the red. Wall Street futures trade mixed, with the DJIA still under pressure but the Nasdaq Composite and the S&P500 advancing amid gains in the aforementioned sector.

Regarding policymakers, Flavio Panetta, Governor of the Bank of Italy and member of the European Central Bank (ECB) Governing Council, said that officials are at a turning point in the monetary policy cycle. He added ECB officials should avoid “even casual” forward guidance on the timing of rate moves and cooled down concerns about stubbornly high service inflation, noting it is not abnormal. Finally, Panetta states that the economic environment is consistent with a normalisation of the monetary stance.

 ECB Chief Economist Philip Lane was also on the wires and said that the overall transmission of monetary policy has been robust and, if anything, stronger than in previous cycles. Overall, ECB officials maintained a cautiously hawkish stance and failed to trigger relevant moves around the Euro.

Data-wise, Germany published the GfK Survey, which showed Consumer Confidence contracted to -21.8 in July from -21 previously, also missing expectations of -18.9. The American session will bring United States (US) May New Home Sales and the result of the latest Federal Reserve (Fed) System Bank Stress Test.

EUR/USD short-term technical outlook

The EUR/USD pair slowly but steadily approaches the June monthly low at 1.0667, the immediate support level. Technical readings in the daily chart support a downward extension, as the pair sild further below all its moving averages, with the 20 Simple Moving Average (SMA) accelerating lower below directionless 100 and 200 SMAs. At the same time, technical indicators turned firmly lower within negative levels, reflecting sellers’ strength.

The 4-hour chart shows sellers are aligned around a mildly bearish 20 SMA, currently at 1.0709, while the 100 SMA gains downward strength far above the shorter one. Finally, the Momentum indicator aims marginally lower around its 100 level, not enough to confirm another leg south, while the Relative Strength Index (RSI) indicator also shows moderated bearish strength, although at around the 38 level, skewing the risk to the downside.

 Support levels: 1.0665 1.0620 1.0580

Resistance levels: 1.0710 1.0750 1.0800  

• Weak sentiment has kept GBP/USD from gaining ground since the start of this week’s trading, with its gains not exceeding the 1.2702 resistance level.
• This was before retreating back to settle around the 1.2668 support level at the time of writing.
• Moreover, it may remain in its current trading range pending the reaction to the US inflation reading, the Fed’s favorite, at the end of the week.

On the other hand, expectations are stronger that the Bank of England (BoE) will cut interest rates in August. Recently, the pound could drift lower if the market increases confidence in a rate cut in August. The UK calendar will be relatively light this week, while the BoE will be muted ahead of the general election on July 4.

Clearly, the shift in interest rate expectations in the UK and the Eurozone will remain important for the pound.

In this regard, according to the forex market, MUFG commented; “The minutes of the latest MPC meeting suggest that policymakers may be ready to cut interest rates as soon as the next policy meeting is held in August. Inflation sentiment remained clearly negative as policymakers indicated caution about flat services inflation. Meanwhile, labor market sentiment deteriorated to levels not seen since May 2023, as policymakers highlighted risks to the slack labor market. According to Nordea Bank, all major central banks may struggle to cut interest rates; “The problem is that global central banks are very likely to be cautious about cutting interest rates when unemployment is historically low, wage growth remains at a multi-decade high, and inflation remains above the 2% target for most central banks.” In contrast, the US dollar faced headwinds on Monday amid a lack of macroeconomic releases in the United States. Elsewhere, a wave of risk-off trading coupled with a slight decline in US Treasury yields dampened investor interest in the US dollar as a safe haven, leaving the greenback as a less favourable investment option throughout most of Monday’s session.

In addition, growing expectations that the Federal Reserve could start cutting US interest rates as soon as September 2024 continued to weigh on the US dollar. While Fed policymakers have maintained a hawkish consensus in recent weeks, the CME FedWatch tool now shows a roughly 60% chance that the central bank will start easing monetary policy in the third quarter of 2024, with an increasing number of economists now leaning towards this narrative. “We expect the US Fed to start cutting rates by September 2024, in line with consensus expectations,” said Sujan Hajra, chief economist and managing director of Anand Rathi Equities and Securities Brokers.

According to reliable trading platforms, the pound traded in a wide range against major currencies at the start of the week, while it rose against the US dollar amid changing market sentiment. With few high-impact releases in the UK at the start of the week, the focus was on the latest industry trends from the Confederation of British Industry (CBI). Also, the survey showed that the total order book balance in June rose to -18, beating expectations of -25 and up from -33 in May. The survey reached a three-month high this month, giving the pound some modest support, but despite the production forecast reaching its highest level since October 2023, export orders fell to their lowest level since February 2021.

For his part, Ben Jones, chief economist at the CBI, said, “It is encouraging to see that manufacturers remain confident that the economy is heading in the right direction, and our June survey suggests that the recovery should broaden over the summer.” One cautionary note is that order books remain weak, the sharp deterioration in export order books is particularly striking and something to watch in the coming months.

Elsewhere, the Bank of England’s hold on interest rates last week has further hampered sterling against most of its peers, with expectations of a rate cut in August still strong. However, increased risk appetite appears to be mitigating the downside for sterling as the session progresses, given its increasingly risk-sensitive status. This has helped sterling strengthen against its safe-haven rivals.

Looking ahead, a number of Fed policymakers are scheduled to speak throughout the week, starting with Mary Daly on Monday evening. If any of the policymakers take a hawkish stance, the “dollar” could gain some investor support amid signs that the Fed’s hawkish consensus remains intact, despite growing market expectations.

Looking ahead to the UK, the lack of notable releases in the coming days could see sterling trading primarily in line with global risk dynamics. If the increased risk appetite continues, the pound could strengthen against its rivals. However, the gloomy trade could leave the pound rudderless against its safe-haven rivals.

Technical forecasts for the GBP/USD pair today:

Based on the performance on the daily chart attached, the GBP/USD price is in a downward correction path and breaking the support at 1.2600 will strengthen the bears’ control. It will then prepare technically for stronger bearish breakouts. Especially, if the factors of the US dollar’s gains continue and the technical indicators will not move towards strong oversold levels without moving towards the support level of 1.2480. On the other hand, the GBP/USD pair will not return to their upward channel path without moving towards the resistance levels of 1.2775 and 1.2830 again.

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• Euro stays on the back foot near 1.0700 after posting losses on Tuesday.
• EUR/USD could extend its slide if 1.0670 support fails.
• An improving risk mood could help the pair limit its losses in the near term.

EUR/USD failed to build on Monday’s gains and closed in negative territory on Tuesday. The pair struggles to regain its traction and trades at around 1.0700 in the European session on Wednesday.

In the absence of high-tier macroeconomic data releases, investors refrain from taking large positions. The US economic docket will feature New Home Sales data for May later in the day, which is unlikely to trigger a significant market reaction.

Meanwhile, US stock index futures trade marginally higher on the day. In case risk flows dominate the markets in the second half of the day, the US Dollar (USD) could lose strength and help EUR/USD limit its losses.

Nevertheless, market participants could remain hesitant to bet on a steady Euro recovery ahead of this weekend’s election in France.

Earlier in the day, European Central Bank (ECB) policymaker Olli Rehn said that market expectations that the ECB will reduce interest rates twice more this year and to as low as 2.25% in 2025 are ‘reasonable’. These comments also seem to be making it difficult for the Euro to find demand.

On Thursday, the European Commission will publish business and consumer sentiment data for June. Later in the day, the US Bureau of Economic Analysis will release the final revision to the first-quarter Gross Domestic Product growth and the US Department of Labor will announce weekly Initial Jobless Claims figures.

EUR/USD Technical Analysis

The Fibonacci 78.6% retracement of the latest uptrend aligns as immediate resistance at 1.0670. If EUR/USD falls below this level and starts using it as support, 1.0600 (psychological level, static level) could be set as the next bearish target.

On the upside, resistances could be seen as 1.0720-1.0730, where the 50-period Simple Moving Average (SMA) on the four-hour chart meets the Fibonacci 61.8% retracement level, and 1.0760 (Fibonacci 50% retracement).

• Euro stays on the back foot near 1.0700 after posting losses on Tuesday.
• EUR/USD could extend its slide if 1.0670 support fails.
• An improving risk mood could help the pair limit its losses in the near term.

EUR/USD failed to build on Monday’s gains and closed in negative territory on Tuesday. The pair struggles to regain its traction and trades at around 1.0700 in the European session on Wednesday.

In the absence of high-tier macroeconomic data releases, investors refrain from taking large positions. The US economic docket will feature New Home Sales data for May later in the day, which is unlikely to trigger a significant market reaction.

Meanwhile, US stock index futures trade marginally higher on the day. In case risk flows dominate the markets in the second half of the day, the US Dollar (USD) could lose strength and help EUR/USD limit its losses.

Nevertheless, market participants could remain hesitant to bet on a steady Euro recovery ahead of this weekend’s election in France.

Earlier in the day, European Central Bank (ECB) policymaker Olli Rehn said that market expectations that the ECB will reduce interest rates twice more this year and to as low as 2.25% in 2025 are ‘reasonable’. These comments also seem to be making it difficult for the Euro to find demand.

On Thursday, the European Commission will publish business and consumer sentiment data for June. Later in the day, the US Bureau of Economic Analysis will release the final revision to the first-quarter Gross Domestic Product growth and the US Department of Labor will announce weekly Initial Jobless Claims figures.

EUR/USD Technical Analysis

The Fibonacci 78.6% retracement of the latest uptrend aligns as immediate resistance at 1.0670. If EUR/USD falls below this level and starts using it as support, 1.0600 (psychological level, static level) could be set as the next bearish target.

On the upside, resistances could be seen as 1.0720-1.0730, where the 50-period Simple Moving Average (SMA) on the four-hour chart meets the Fibonacci 61.8% retracement level, and 1.0760 (Fibonacci 50% retracement).

GBP/JPY Forecast Video for 25.09.23

British Pound vs Japanese Yen Weekly Technical Analysis

The British pound has fallen during the course of the week, which makes sense considering that the Bank of England decided to keep interest rates flat. By doing so, it shows that there is perhaps some concern out there when it comes to the UK economy, and therefore the British pound may struggle a bit. However, the Bank of Japan did the same thing, so I think once the dust settles, it means that we will continue to see a lot of the same behavior. Because of this, I fully anticipate that there will be a “buy on the dips” opportunity, but we may have to test the crucial ¥180 level before we do it.

If we break above the top of the candlestick for the week, then it opens up the possibility of a move toward the ¥185 level. The ¥185 level is an area that I think a lot of people have to pay close attention to, and if we were to break above there, then it’s likely that the market goes much higher, as we continue to see the interest rate differential drive this pair much higher. I have no interest in shorting this pair anytime soon, as the interest rate differential continues to pay you at the end of the session every day. That being said, it doesn’t mean that we will get the occasional pullback, but I think it opens up the possibility of looking at this as a value proposition more than anything else. Alternatively, I do think that we break out to the upside although it may take some time to get there.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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