22 July 2016 at 13:56 GMT
The Japanese yen attempted to rally after recent lows. Photo: iStock
By John J Hardy
Key developments in FX today:
- The JPY found its legs again after a comeback from new local lows yesterday, creating bearish reversal (bullish JPY) on several JPY cross charts.
- Elsewhere, the USD rally is stalling a bit and risks losing further credibility ahead of next week's key US event risk, the FOMC meeting on Wednesday. The EURUSD around 1.1000 is a good litmus test for USD strength.
- Gold and silver powered back higher, with the support in gold found just above the last tactical support area around 1310/1300.
Cable took a beating just shy of the key 1.3300 area as the flash Services PMI was weaker than expected. The fresh downside momentum could spill over next week to a 1.3000 test at minimum, but possibly to an eventual challenge of the lows around 1.2800 and beyond.
USDCHF action locally was a disappointment for the bulls as we have a bearish candlestick reversal setup that comes at new highs and around the 200-day moving average. The day's volatility was not remarkable, making the reversal somewhat less compelling, but follow-through lower after the test of the new highs and the 200-day moving average would offer another setback for the bulls here.
– Edited by D. Deacon