Looking for Lower-High in USD/JPY as Pair Pushes Into Resistance

Talking Points:

- GBP/USD Searches for Support Ahead of U.K. 2Q Gross Domestic Product (GDP)

- USD/JPY Comes Up Against Resistance Ahead of Japan’s Consumer Price Index (CPI)

- USDOLLAR Turns Around Ahead of 10,470 Pivot as New Home Sales Disappoint

GBP/USD:

• Weakens to a fresh monthly low as U.K. Retail Sales increases 0.1% versus 0.3% expected; 2Q GDP expected to expand another 0.8%.
• May need strong growth figures for GBP/USD to retain the bullish trend from earlier this year; 1.6940-60 remains the key region of interest as it stands above trendline support.
• DailyFX Speculative Sentiment Index (SSI) continues to narrow but remains in negative territory as ratio current stands at -1.49.

USD/JPY:

• Will continue to look for resistance around former support region, which comes in at 101.80-102.00.
• Remains at risk for a further decline as the USD/JPY continues to carve series of lower-highs in July.
• Japan’s Consumer Price Index (CPI) is expected to narrow to an annualized pace of 3.5% from 3.7% in June, but it looks as though the Bank of Japan (BoJ) will retain its current approach for monetary policy as the central bank remains upbeat on the real econmy.

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USDOLLAR Daily

Chart - Created Using FXCM Marketscope 2.0

USDOLLAR(Ticker: USDollar):

• Dow Jones-FXCM U.S. Dollar Index correction stalls ahead of 10,470 as U.S. New Home Sales slip 8.1% in June amid forecasts for a 5.8% decline.
• Remains at risk of carving a lower-high ahead of the Fed’s July 30 meeting as Chair Janet Yellen retains a dovish tone for monetary policy; will continue to favor the downward trending channel from earlier this year.
• Will continue to look for a bearish break in the Relative Strength Index (RSI) to have greater conviction/confirmation of a lower-high.
• Interim Resistance: 10,508 (61.8% retracement) to 10,524 (38.2% retracement)
• Interim Support: 10,354 (Oct. low) to 10,375 (50.0& retracement)

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--- Written by David Song, Currency Analyst

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

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