Two trades to watch: USD/JPY, FTSE

Graphic of trading data chart
Fiona Cincotta
By :  ,  Market Analyst

USD/JPY slips post BoJ minutes ahead of US consumer confidence

USD/JPY rose yesterday, snapping a two-day losing steak, boosted by the broadly upbeat market mood.

Today USD/JPY is holding over 136.00 as investors digest the minutes from the latest BoJ meeting and look ahead to the start of the two-day FOMC meeting.

The minutes from the BoJ showed that policymakers agreed to keep monetary policy ultra-loose to support the fragile economy, providing a tailwind for the pair. The BoJ also reiterated its commitment to continue buying bonds at an annual pace of around 80 trillion yen.

Before the FOMC meeting starting later today, US consumer confidence data is expected to show a decline to 97.2 in July, from 98.7.

The Fed is expected to raise interest rates by 75 basis points tomorrow, widening the Fed- BoJ divergence.

Where next for USD/JPY?

After last week’s fall to 135.55, USD/JPY has encountered some resistance around the 136.70 level of the 20 sma. Failure to rise back over the 20 sma, combined with the bearish MACD, keeps sellers hopeful of further downside. A break below 135.55 is needed to extend the bearish trend towards 135.00 psychological support.

On the flip side, a move over the 20 sma could see resistance at 137.80 July 11 high come into play ahead of 138.20.

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FTSE rises with earnings, oil in focus

The UK index is rising on the open as investors digest a slew of earnings and rising oil prices. While EasyJet disappointed, falling following a £133 million hit from flight cancellations and delay chaos.

Unilever, meanwhile, rose after upwardly revising sales guidance after price hikes helped the consumer staples giant beat forecasts.

Caterer Compass Group is also on the rise after an upbeat trading update as it raised its organic revenue growth guidance from 30% to 35% after reporting a doubling in revenue in the three months to June.

Elsewhere oil majors are on the rise, tracking oil prices higher as tight supply and concerns over Russian gas supply lifted prices across the energy complex.

Where next for the FTSE?

The FTSE has pushed above the 50 SMA, which, combined with the bullish RSI, suggests that more gains could be had. Buyers need to rise above resistance at 7350 to extend the upward trend to 7385 the 100 sma. A break above here brings the 7500 round number into focus.

Failure to retake resistance at 7350 could see the price fallback below the 50 sma at 7300   and open the door to support at 7160 the May low.

 

 

 

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