USD/JPY is under pressure as key resistance is set at 102.00. The pair is currently off yesterday's day-low at 100.65. Meanwhile, it is still capped by the descending 50-period line on 30-minute chart as well as the key resistance at 102.00 (a key support seen from July 29 to August 2). In case the current rebound fails to bring the pair above 102.00, the pair should return to 100.65. Below 100.65, the next support would be found at the psychological level of 100.00.
Market Commentary:
On Tuesday, U.S. stock indexes ended broadly lower, dragged by shares of consumer-discretionary companies. The Dow Jones Industrial Average fell 0.5% to 18313. The blue-chip index posted a losing streak of seven straight sessions for the first time since August 2015. The S&P 500 dropped 0.6% to 2157 and the Nasdaq Composite was down 0.9% to 5137.
Muted July auto sales led shares of both Ford Motor and General Motors to decline over 4%. Department store shares also fell. Kohl's was down 8% while Macy's and Nordstrom's were off 7%.
European stocks remained under pressure with the STOXX Europe 600 losing 1.3%. Germany's DAX shed 1.8%, the U.K.'s FTSE declined 0.7%, and France's CAC was down 1.8%.
The U.S. Commerce Department reported that consumer spending increased 0.4% on month in June (vs. +0.3% expected) and personal income rose 0.2% on month (vs. +0.3% expected).
Nymex crude oil continued on its downtrend losing 1.4% to settle at $39.51 a barrel. Gold gained 0.8% to $1363 an ounce and silver was up 1.0% to $20.61 an ounce. The benchmark 10-year U.S. Treasury yield rose to 1.537% from 1.499% Monday.
As investors kept their expectations that the U.S. Federal Reserve would delay raising interest rates in view of the weaker-than-expected second quarter GDP growth, the U.S. dollar sank to the lowest level since the Brexit vote with the ICE U.S. Dollar Index shedding 0.7% to 95.03. EUR/USD gained 0.6% to a six-week high of 1.1225.
USD/JPY plunged 1.5% to 100.88 (day-low at 100.65) in line with expectations, as Japanese Prime Minister Shinzo Abe's Cabinet approved 13.5 trillion yen in fiscal measures.
GBP/USD surged 1.4% to 1.3355. Although the Markit/CIPS U.K. Construction PMI edged down to 45.9 in July, the lowest level since June 2009, it was still better than expected.
While Australia's central bank lowered its key interest rate, as expected, to a record low of 1.50% from 1.75%, AUD/USD jumped 1.0% to 0.7609 (day-high at 0.7638).
Recommendations:
The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 100.65. A break below this target will move the pair further downwards to 100.00. The pivot point stands at 102.00. If the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 102.85 and the second one at 103.95.
Resistance levels: 102.85, 103.95, 104.60
Support levels: 100.65, 100.00, 99.55
The material has been provided by InstaForex Company - www.instaforex.com