The British pound was the best performing currency against the greenback of the majors and found near-term support ahead of the monthly low, while the Japanese yen tumbled lower across the board, with the USD/JPY rising to a high of 92.53.
The British pound was the best performing currency against the greenback of the majors and found near-term support ahead of the monthly low (1.6113) to hold above 1.6150 going into the U.S. trade. As risk appetite falters, the GBP/USD may continue to trend lower after moving roughly 80% of its daily average true range, and may test the September low for near-term support as global equities trend lower. As a result, a break below could lead the pair towards the July lows throughout the week however, as the relative strength index approaches oversold territory, the pair is likely to hold a narrow range ahead of the Bank of England meeting minutes as investors weigh the outlook for future policy.
The Japanese yen tumbled lower against the U.S. dollar, with the USD/JPY jumping ahead of the North American trade to break above the 10-Day SMA (91.46) and reached an intraday high of 92.53. However, the overnight advance looks to be losing steam as the 30-minute RSI holds above 70, and the dollar-yen has fallen back below the 20-Day (92.36) after moving 133% of its daily ATR. As global equities trend lower, we are likely to see the USD/JPY remain bid throughout the trading session as the reserve currency continues to benefit from safe-haven flows however, gains are likely to be capped as the overnight rally remains overdone.
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[I]To discuss this report contact David Song, Currency Analyst: <[email protected]>[/I]