USD/JPY nears resistance ahead of US CPI
Fawad Razaqzada July 11, 2019 11:40 AM
Ahead of the publication of CPI, the dollar has managed to bounce off its worst levels, with the USD/JPY for example climbing to 108.15 after dipping to 107.85 overnight. Undoubtedly, some speculators are happy to book profit on their short dollar positions in the event CPI comes out stronger than expected
After yesterday’s testimony from Jay Powell, the dollar fell as the Fed Chair more or less confirmed interest rates are going to be cut. Traders are now looking forward to this afternoon’s release of US consumer inflation figures before deciding whether to increase the pressure on the dollar or ease off the gas. The Consumer Price Index is expected to come in at 1.6% year-over-year, down from 1.8% in May, while core CPI is seen unchanged at 2.0% in June. On a month-over-month basis, both headline and core CPI prints are expected at +0.2% vs. +0.1% previously.
Ahead of the publication of CPI, the dollar has managed to bounce off its worst levels, with the USD/JPY for example climbing to 108.15 after dipping to 107.85 overnight. Undoubtedly, some speculators are happy to book profit on their short dollar positions in the event CPI comes out stronger than expected. But given the Fed’s desire to cut interest rates and the technical damage incurred on most dollar charts, the path of least resistance remains to the downside for the buck. So, as things stand, we favour looking for rallies to be faded and supports to break down.
The USD/JPY created a bearish engulfing candle on its daily chart yesterday, and we have already seen some downside follow-through. The key level to watch is around 108.25/35, as can be seen on the hourly chart. As well as prior support, which has now broken down, this is where the back side of the bearish trend line comes into play. So, any move back into this level could be faded today, unless CPI beats expectations by a meaningful margin.
Source: Trading View and FOREX.com.
Source: Trading View and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.