The Fed’s Interest rate hike and worse GDP data spiced up trading during the second half of the week.
Surprisingly, the biggest moves can be seen on the yen, which strengthened dramatically. You could argue that this is because of a risk-off mode and a flee towards safe haven assets. Fair enough, but at the same time, stocks and emerging markets currencies climb higher, so something here doesn’t add up.
The yen's rise is interesting from a technical point of view. For example, we’ll use GBP/JPY, where we have a proper sell signal. This is quite surprising because we were close to the actual opposite, a buy signal during the middle of the week. The price almost broke the upper line of the symmetric triangle (orange), but it happened to be a false breakout, which led to a bigger sell-off.
The drop eventually led to a breakout of the lower line of the formation, which gives us a signal to sell. After meeting lows from the beginning of July (yellow), the price is slightly climbing higher – a very understandable movement considering the magnitude of the most recent drop. It will most probably climb towards the blue area, in order to test it as a local resistance, but the main, dominant signal is sell.
