The Australian dollar continued to rally and logged a fresh 26-month peak against the U.S. buck, at 0.7947. The currency has now risen in eight out of the last nine sessions, making a convincing break of the 0.7700 level on route. An unexpected peppering of hawkishness in the RBA minutes from the early-July policy meeting, released yesterday, which followed solid GDP and trade data out of China, have been underpinning the antipodean currency. Elsewhere, the dollar and the other main currencies have posted narrow ranges. The greenback to a whack on news that the U.S. health care reform bill flopped in the Senate, which rightly or wrongly raised fears about prospects for tax reform and other pro-growth parts of Trump’s agenda, but managed to pick up some in Asian trade. Markets had already been bearish of the dollar into the news from the Senate, tracking diminished Fed rate hike prospects following weak inflation and other data in recent sessions. EURUSD logged a 14-month low at 1.1583, since settling in the lower 1.15s. USDJPY left a three-week low at 111.68 before recouping back above 112.00.
The very strong reversal on July 12 for USDJPY along with the long legged Bearish candles and the yesterday’s confirmation of 50 DMA moving Below 200 DMA in the Daily Chart, suggested further weakness. These were sufficient to prompt a Short position earlier today at 112.07. In the 4-hour Chart, the parabolic SAR and MACD remain negative since July 11. Meanwhile USDJPY keeps moving on the lower Bollinger Bands area, below a Trendline set since reversal day, which may also be proven as a sufficient resistance line.
Target 1 is around 200-period SMA, which is at 111.70 and target 2 is at the 50.0 Fibonacci level, i.e. 111.30. Target 1 is an Intra-day targets (4-hour Chart), while Target 2 is a Daily one. Support has been set at 112.50.
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