EUR/JPY Remains Capped by Former Support; Lower-High in Place?

Talking Points:

- EUR/JPY at Risk for Lower-High as Focus Turns to ECB & BoJ Meetings

- Waiting for RSI Break on USD/CAD to Favor Downside Targets

- USDOLLAR Remains Overbought Ahead of Non-Farm Payrolls (NFP)

EUR/JPY:

• Despite the downturn in risk sentiment, EUR/JPY continues to threaten former support around 137.70-90.
• Need a turn in the Relative Strength Index (RSI) for confirmation/conviction of a lower-high as it threatens the bearish momentum from earlier this year.
• European Central Bank (ECB) and Bank of Japan (BoJ) interest rate decisions may set the tone for the August trade as the Governing Council looks to implement more non-standard measures.

USD/CAD:

• Sits at support from the beginning of the year around 1.0900-20, while the RSI struggles to push into overbought territory.
• A bearish break in the oscillator should highlight a near-term topping process in the USD/CAD.
• DailyFX Speculative Sentiment Index shows retail crowd has turned net-short USD/CAD this week as the ratio stands at -1.90.

For more updates, sign up for David's e-mail distribution list.

Join DailyFX on Demand for Real-Time SSI Updates Across the Majors!

Read More:

Price & Time: The Longer-Term Implications of Recent USD Strength

USD/JPY Fueling Broader USD Breakout; EUR/USD Weak Under 1.3400

USDOLLAR Daily

Chart - Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

• Dow Jones-FXCM U.S. Dollar Index remains overbought as it threatens the next topside objective around 10,555-10,561.
• Need to see the RSI break down from the bullish trend for a near-term pullback; looks as though a more bullish outlook will take shape as the Fed remains on course to halt its quantitative easing (QE) program in October; when will markets start to price it in?
• Beyond Non-Farm Payrolls (+231K), we will keep a close eye on Average Weekly Earnings (2.2%) as Chair Janet Yellen continues to highlight the slack in the labor market.
• Interim Resistance: 10,555 (50.0% retracement) to 10,561 (100% retracement)
• Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)

Click Here for the DailyFX Calendar

--- Written by David Song, Currency Analyst

To contact David, e-mail [email protected]. Follow me on Twitter at @DavidJSong.

To be added to David's e-mail distribution list, please follow this link.

Trade Alongsidethe DailyFX Team on DailyFX on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums