Chart of the Day EURJPY
EURJPY Potential Reversal Zone – Probable Price Path
Market worries about the slowdown in the pace of recovery in the United States, coupled with continuing signs of deterioration in Sino-US relations, and rising demand for hedging, the US dollar index fell, falling 0.3% to 94.4 last Friday, a six-day losing streak, and a cumulative decline of 1.6% throughout the week. It was the biggest drop since the end of March; this morning it once fell again by nearly 0.4% to 94.1, the lowest since September 2018. Gold prices rose more than 5% last week, they rose more than 1% this morning to US$1,923 per ounce, a record high.
After the United States closed the Chinese Consulate General in Houston today, China also requested the United States to close the Consulate General in Chengdu and expressed strong dissatisfaction with the “forcible entry” of American personnel into the consulate in Houston. White House officials said that the Chinese consulate was closed because Beijing directed criminal and secret activities to steal trade secrets and conduct malicious influence activities throughout the United States.
The sales of new homes in the US in June rose 13.8% month-on-month to an annualized rate of 776,000 units, a 13-year high. The Fed will announce the results of the interest rate discussion on Wednesday, and the United States will announce the second quarter economy on Thursday or the quarterly annualized rate will fall 35%. The White House’s chief economic adviser Kudlow estimates that quarterly growth in the third and fourth quarters can reach an annualized rate of 20%
EUR: The initial value of the Markit Comprehensive Purchasing Managers Index in the Eurozone rebounded to 54.8 in July, much higher than the expected 51.1; the service industry indexes of Germany and France rebounded to 56.7 and 57.8, respectively, far exceeding market expectations; the German manufacturing index rose to 50 , Higher than the expected 48, but the French manufacturing index unexpectedly fell slightly to 52, and the market expected it to rise to 53
JPY: Japan’s capital expenditure in the first quarter rose only 0.1% year-on-year, which was lower than the initial estimate of 4.3%, mainly because the service industry investment growth was less than half of the initial value; as for software expenditure, it fell 1.4%
From a technical and trading perspective, as discussed in last week’s live market analysis session the EURJPY has potentially formed a double top pattern at the 124 level, bears will be watching for a close today below the near term volume weighted average price at 123.40 which also retains the the weekly pivot, bearish exposure should be rewarded setting up a test of ascending trendline support and the monthly pivot below 122.00, on the day only a close back through 124.40 would negate the downside thesis.
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