Daily thread to exchange ideas and to share your thoughts
The dollar held its ground after the Fed minutes yesterday, recovering from a brief dip as it maintained a modest advance against commodity currencies, with USD/CAD in particular in search of a breakout above 1.2500 currently.
As oil prices retreat from the 2018 highs and correct, the loonie is also under pressure with USD/CAD perhaps setting sights on the April highs near 1.2630 next with the 200-day moving average also targeted, currently seen @ 1.2650.
CAD/JPY is also dragged lower as Treasury yields continue to look heavy, leaning on its 100-day moving average and that might offer buyers an area to scale in a little though I'd have more conviction to buy a further dip once things get sorted out in the bond market.
The 21 June low @ 87.96 offers additional support but I would not be surprised to see a further retracement towards the April lows before a stronger bounce is observed.
Other yen crosses are also experiencing a similar technical dilemma with GBP/JPY testing its own 100-day moving average @ 152.14 while EUR/JPY fell past that level this week towards its June low @ 130.04 now with the euro itself slipping to the lowest since April against the dollar, testing waters below the 1.1800 level.
We are approaching a key technical crossroads for yen pairs as such with the bond market set to dictate sentiment for a bit until the market sorts itself out.
There are still no clear answers for what is driving the move in Treasuries but only time will tell as it unravels itself but in my view, I'd still argue that the path of least resistance is that for yields to track higher in the bigger picture. So, patience is a virtue.
What are your views on the market right now? Share your thoughts/ideas with the ForexLive community here.
