(Jing Ren – Orbex)
USDJPY struggles for bids
The Japanese yen rallied after July’s CPI exceeded expectations. A lack of support from the 30-day moving average (136.50) has put the dollar bulls on the defensive. Then a drop below the demand zones around 136.00 then 135.00 triggered rounds of liquidation with buyers rushing to the exit. As the RSI dips into the oversold area, the greenback may find some respite over 134.00. 135.70 is the first resistance in case of a bounce. A bearish breakout would deepen the correction towards the daily support at 132.00.
NZDUSD finds support
The New Zealand dollar edges higher as risk appetite makes a comeback across markets. The pair previously came under pressure at 0.6310 next to the origin of the sell-off in late June. The kiwi subsequently found support at 0.6190, suggesting strong interest in maintaining the current recovery. A bullish MA cross shows acceleration to the upside. A break above 0.6310 could flush out the remaining sellers and pave the way for an extended rally above the daily resistance at 0.6390. 0.6250 is the first support should the pair fall back.
EURGBP breaks lower
The euro weakens as the energy crisis intensifies. After the euro failed to achieve a higher high above 0.8580, a fall below the base of the rebound at 0.8420 may have sealed its fate. As buyers rush to close their positions, the single currency could be subject to rising selling pressure. Last May’s lows around 0.8370 was another support and its breach confirms that sentiment has turned downbeat. 0.8440 is the resistance where the bears might look to sell into strength. 0.8310 would be the next target when momentum returns.
USDJPY: The currency in bullish impulse may reach 140.06
To date, the USDJPY currency shows the formation of a global impulse trend, which consists of cycle waves.
For more than four months, the price has been rising in a cycle wave V.
Wave V, apparently, takes the form of a 5-wave impulse ①-②-③-④-⑤ of the primary degree. Within the framework of this impulse, the first four parts look completed.
Currently, the construction of the primary fifth wave is assumed, which takes the form of an intermediate impulse. The price in the final primary wave ⑤ may rise to the level of 140.06.
At that level, wave V will be at 200% of previous cycle impulse III.
An alternative scenario shows that the entire cycle wave V has already ended in the form of a primary impulse.
Thus, in the next coming trading weeks, we can expect a fall in the exchange rate and the formation of a new bearish trend.
In the near future, we can assume the formation of a bearish impulse, which will consist of primary sub-waves ①-②-③-④-5, as shown in the chart, where the first two small sub-waves ①-2 are constructed.
The upcoming decline may reach the area of 121.27, the previous minimum of fluctuations, and possibly even lower.