The American dollar is under strong selling pressure ahead of US events, with USD/JPY trading near the 105.00 level. The pair is technically bearish and could accelerate the slump towards 104.20, FXStreet’s Chief Analyst Valeria Bednarik reports.
“The focus is today on US Retail Sales and the US Federal Reserve monetary policy decision. Sales are foreseen up 1% in August, while the Control Group sub-component is expected at 0.5%, down from 1.4% in the previous month. As for the Fed, the central bank will likely refrain from making changes to its monetary policy, after announcing a new policy framework, which targets average inflation. Investors may be eyeing from an explanation on what inflation ‘moderately above’ 2% means for policymakers. Would they let it run to 2.5% or 3.0%? This is the big question surrounding Powell & Co. today, although it seems unlikely they will provide a clear answer.”
“The USD/JPY pair is oversold in the short-term but still bearish. The 4-hour chart shows that it is currently developing far below a sharply bearish 20 SMA, which extends its decline below the larger ones. Technical indicators, in the meantime, have stabilized in oversold levels, with no signs of changing course. Further declines are to be expected on a break below 105.10, with the pair then targeting 104.18, July’s monthly low.”
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