USD/JPY: A Short Opportunity

EUR/USD broke below the 1.3500 level again today after reaching 1.3490 on Friday. EUR/USD fell to 1.3481 its lowest since February, when it touched a low of 1.3476. Releases of US inflation data are scheduled for today. GrowthAces.com’s forecast for headline figure is 2.1% and for core inflation is 2.0%, in line with median market expectations. Our outlook for EUR/USD is still bearish with the target of 1.3295 (lows from November 2013).

Short-term outlook: mixed with bearish bias
Medium-term outlook: mixed with bearish bias
Long-term outlook: bearish


The governor of the Reserve Bank of Australia Glenn Stevens said record low rates were working as intended and he was content with the current state of policy. Stevens added that the sluggish recoveries seen in many major countries could in part be due to a simple lack of business confidence, which interest rates alone could do nothing about. Interest rate futures responded by slightly lowering the probability of a further cut in rates. AUD/USD has jumped above 0.9390 after RBA governor Stevens speech was released. The central bank has kept rates steady at a record low 2.5% after last easing in August 2013. The near-term risk for the AUD is domestic inflation data on Wednesday. An upside surprise is likely to trigger a significant market reaction. The resistance level is seen at 0.9400/10 that could be broken in case of higher-than-expect CPI reading. The support is near 55-DMA 0.9356.

Short-term outlook: mixed with bullish bias
Medium-term outlook: mixed
Long-term outlook: mixed


USD/JPY increased on Tuesday on a slight reduction in risk aversion that lifted equities across Asia. The markets are, however, still eyeing geopolitical tensions in the Ukraine and Gaza, that keeps USD and JPY in a narrow corridor against JPY. In the near-term any flare-up in tensions or a new and deeper round of sanctions against Russia is likely to support JPY. We are looking to go short on USD/JPY ahead of 101.80 (July 16 high). We remain bearish on JPY.

Short-term outlook: mixed
Medium-term outlook: mixed with bearish bias
Long-term outlook: mixed with bearish bias