05 July 2016 at 14:18 GMT
By John J Hardy
Key developments in FX today:
Weak risk sentiment generally weighed on global markets today as the US returns from a 3-day weekend, dragging sterling to new depths and weighing on upstart commodity dollars. The greenback matched the euro's strength today, but both wilted in front of the yen freight train. It will be interesting to see how investors treat the US dollar after key data later this week, including tomorrow's ISM non-manufacturing survey for June and the June jobs numbers up on Friday.
USDJPY is following up on its move lower, psychologically 100.00 could prove a sticking point, but this being a big-picture move, the big-picture Fibonacci retracement looks like the 61.8% retracement of the entire record low to Abenomics high coming in just below 95.00.
Source: Saxo Bank. Create your own charts with SaxoTraderGO click here to learn more
Investors are treating the euro as a safe haven peer of the US dollar, if not the yen, helping to drive the pair to new highs and the next levels arrive in the 0.8700/50 area from flatline and retracement levels tracing from the entire 0.9800-0.7000 sequence.
There are few waypoints when in unprecedented territory, but strike prices on barrier options at round figures and psychology could conspire to see price action clustering around round levels like 1.3000, 1.2750, etc... Resistance moves up to the 1.3200/50 area now that we're following through.
The rally got more than uncomfortable for the bears as AUD managed to take out the key Fibo retracements above 0.7500, but today's selloff offers a ray of hope and a fresh wedge for the bears if it extends below 0.7400 and erases the latest surge, though structurally we need to take out the 0.7275/0.7300 level for a more profound signal.
Silver has taken the initiative among the precious metals and mashed all the way to 21.00+ Fibo's include the 38.2 Fibo of the latest rally tested today, then the 61.8% of same at 18.67 and between there, the 38.2% of the rally from June 1, which comes in around 19.10.
Source: Saxo Bank
– Edited by Clare MacCarthy