USD/JPY Forecast: Trendline support could be put to test ahead of US ISM non-manufacturing release

Omkar Godbole FXStreet Contributor

Dollar-Yen pair clocked a high of 104.14 levels in the Asian session on Monday before Bank of Japan (BOJ) governor Kuroda derailed the dollar rally by talking about the limits to what the BOJ can achieved with respect to debt monetization. Kuroda assured markets that monetary policy has not reached its limits, although markets read it the other way round. Thus the spot fell to a low of 103.14 before recovering slightly to end the day around 103.40.

US desks were closed on Monday hence the activity was thin, especially in the North American session.

Kuroda acknowledgement that monetary policy has limits may have come little too late. Furthermore, the timing of his comments is interesting given the USD/JPY exchange rate appears to have bottomed and moving higher. Moreover, Kuroda’s comments put a speed breaker.

Focus on US ISM non-manufacturing

The main even for the day is the US ISM non-manufacturing release. The employment sub index is unlikely to move markets this time around since we have already had a poor non-farm payrolls release. Nevertheless, the bid tone around USD would strengthen in case the headline figure blows past expectations. On the other hand, the USD/JPY pair could slide if the ISM number is a disappointing.

Technicals – Eyes trendline support

Daily chart

Falling trend line drawn from Jan 29 high and May 30 high comes around 103.00 levels today.
Despite pair’s rally from 99.54 to 104.13 the subsequent retreat to 103.14 suggests a short-term consolidation with downside bias is likely to unfold before a fresh rally is seen.
The daily MACD and RSI stay well above 50.00, which add credence to view that fresh demand is likely on dips.
The corrective move could take the pair down to 103.00 – 102.70 (50-DMA). A rebound from there followed by a break above 104.13 on day end closing basis would open doors for 105.25 (100-DMA).

AUD/USD Forecast: Awaits RBA rate decision

Aussie is on the rise while the Australian stock market has given up some of yesterday's strong bounce amid broad selling ahead of this afternoon's rates decision - the last under RBA governor Glenn Stevens. Markets are expecting a status quo policy. There is little scope for a surprise on the ‘forward guidance’ front given this last rate decision under governor Stevens.

Nevertheless, markets will be paying close attention to the wording on the next move in interest rates, exchange rate, inflation and labour market outlook. Aussie could soar in case the statement reads “there is no need for an aggressive policy easing as of now”.

Technicals – Trend line hurdle intact

Daily chart

Rising trend line drawn from May 30 low and July 27 low comes around 0.7090.
Despite Aussie’s rebound last week from 100-+DMA support, the subsequent failure on Friday and Monday to hold/break above the rising trend line suggests the odds of a similar move today and a fall back to 0.7540 levels are high.
On the higher side, we need a day end close above 0.7616 as that would signal bearish invalidation.

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD seems vulnerable near mid-1.3500s; UK CPI/FOMC Minutes awaited

The GBP/USD pair struggles to capitalize on the previous day's late rebound from an over one-week low – levels below the 1.3500 psychological mark – and trades with a negative bias for the third consecutive day on Wednesday. The downside, however, remains cushioned as investors seem reluctant to place aggressive directional bets ahead of the release of the latest UK consumer inflation figures and FOMC Minutes.

Gold regains positive traction after Tuesday's over 2% slump as traders await FOMC Minutes

Gold gains some positive traction during the Asian session on Wednesday and recovers a part of the previous day's heavy losses more than 2%, to the $4,843-4,842 region or a nearly two-week low. The intraday move higher could be attributed to repositioning trade ahead of the release of the FOMC Minutes.

Top Crypto Gainers: Jito drops, Morpho holds steady, Convex Finance climbs

Decentralized Finance tokens, including Jito, Morpho, and Convex Finance, rank among the top-performing crypto assets over the last 24 hours. Jito dips on Wednesday after rallying 22% the previous day on the launch of a new mainnet node.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.