Bank of Japan (BoJ) Governor Ueda spoke in parliament and sounded dovish, as he said that the wage-inflation cycle is weak and that it’s desirable for FX to move in a stable manner.
Japanese banks are falling hard on Wednesday, with all members in the TOPIX Banks Index down. The gauge tumbled more than 4%, the most since March. This drop may have more room to run.
Although the exact reason behind today’s fall is still unclear, investors may be losing hope for an early tightening of monetary policy.
USDJPY continued to rally over 105.70 during the Asian session, and it might be a matter of time until the BoJ intervenes. For traders, it’s a risk management game.
DXY retesting resistance
The US Dollar Index tried to break above the 105.70 resistance area but failed to stabilize and closed yesterday’s trading around 105.50 with a reversal candle on the daily chart, while the RSI indicator remains below the 50 key level.
In the meantime, the current upside move is considered another upside retracement which is likely to remain limited below 105.70 and possibly 106.0 before the downside pressure resumes.
On the downside view, the main targets remain unchanged, with the current downside trend possibly targeting 104.70 followed by 104.40 which could be seen within the next two weeks.
Gold tumbles below $1970
Gold declined for the 2nd session in a row after it failed to reclaim the $1970 resistance area, dropping to as low as $1957, nearing $1950.
The current decline comes despite the continuous tension in the Middle East.
In the meantime, the next support area remains at $1950, while a break below that support may clear the way for further declines towards $1935.
Brent crude oil below $82
Brent Crude declined sharply over the past few days, losing about 7% within the past three trading days. Such declines are driven by the outlook of the world’s top importer, China, which is not looking great.
Refining margins are slipping, stockpiles are building, and a hoped-for sharp jump in air travel still hasn’t materialized.
Brent declined to the lowest level since July, reaching as low as $81.30 during yesterday’s trading, erasing the premium from the Middle East tension. Worries over the state of the economy in China may add to the bearish sentiment.
However, the 61.8% of the latest rally which began at the end of June currently stands at $81.06, which might lead to another short-term bounce and to retest the $84 in the coming days.
Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.
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