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The Japanese yen continues to rally. USD/JPY is trading at 148.86 in the European session, down 0.31% on the day at the time of writing. On Thursday, the yen strengthened as much as 148.50, its best showing since May 11.

Yen continues to pummel US dollar

Only three weeks ago, the yen looked dead in the water. USD/JPY was trading just shy of 162, its highest level in almost four decades. Since then, the yen has been on an absolute tear, rising a staggering 7.9%, including 3.1% this week.

What is driving the yen’s spectacular turnaround? First, the Bank of Japan raised interest rates this week to 0.25%. Although rates remain at low levels, this rate increase, the second since March, indicates that the BoJ is slowly making the shift to normalization after decades of an ultra-loose accommodative policy.

The BoJ also announced it would taper its bond purchases, which is another tightening step.
Second, investors have become less enthusiastic about the US dollar now that a September cut is looking very likely and are looking to park their assets elsewhere.

The US economy is showing some signs of weakness, such as this week’s ISM manufacturing PMI for July, which posted the sharpest contraction since November 2023. This has driven funds away from the US dollar towards safe-haven assets such as the yen. Today’s nonfarm payrolls are expected to fall from 206 thousand to 175 thousand, which could further boost the yen at the expense of the US dollar.

This week’s BoJ rate hike showed that change is afoot in Japan and the government’s annual white paper on economic and fiscal policy, which was released today, supported that view. The white paper said that Japan was showing signs of breaking out of deflation, noting that businesses were now passing on costs to consumers due to increased costs from the yen’s sharp decline.

USD/JPY Technical

• USD/JPY continues to break below support levels. Earlier, it pushed below support at 149.19 and is testing support at 148.72. Below, there is support at 149.59
• 150.03 and 150.44 are the next resistance lines

GBPJPY continues to trend lower and fell to the lowest levels since mi-March during European session on Friday.

The cross remains in a steep downtrend from 208.11 (July 11 peak, the highest since Aug 2008), fueled by renewed strength of yen, following interventions by Japan’s authorities, while BoE rate cut added pressure on sterling.

Strong bearish signals were generated on surge through rising daily cloud (spanned between 200.39 and 196.71), breach of 200DMA (191.74) and today’s violation of Fibo support at 189.55 (61.8% of 178.73/208.11 upleg).

The pair is on track to end the fourth consecutive week in red, after close of trading in July with the biggest monthly loss since June 2016, added to negative prospects, as reversal pattern is forming on monthly chart.

Deeply oversold daily studies may prompt a partial profit-taking at the end of the week, with upticks to mark positioning for fresh push lower.

Broken 200DMA reverted to initial resistance (191.74), followed by broken Fibo 50% support (193.42) and daily cloud base (196.83), which should cap stronger bounce and keep bears in play.

Targets lay at 185.66 (Fibo 76.4% of 178.73/208.11) and 183.56 (weekly cloud top).

Res: 189.95; 191.74; 193.42; 196.83.
Sup: 188.99; 187.95; 185.66; 183.56.

• USDCAD marks new higher high after disappointing ISM manufacturing PMI
• A close above 1.3880-1.3900 is needed to postpone profit-taking
• US nonfarm payrolls eagerly awaited at 12:30 GMT

USDCAD began the month on a positive note, swiftly recovering from its recent setback and reaching an eight-month high of 1.3877, slightly above April’s peak of 1.3844.

The pair has been in a bull run since bottoming twice near May’s floor of 1.3588 and around the 200-day exponential moving average (EMA) on July 11, but the recent comeback was not powerful enough to achieve a close above January’s resistance line yesterday. Given the weakening momentum in the RSI and the stochastic oscillator, which are close to overbought levels, traders might exercise some caution.

On the downside, the falling line, which connects the 2022 and 2023 highs, might provide some footing near 1.3840 ahead of the 1.3785 handle, where the 20-day EMA is converging. A move below the latter could dampen sentiment once the bears cross below the 1.3723-1.3743 constraining territory, which includes the 50-day EMA, and the broken resistance line from April’s peak. Should the bears dominate there, the decline could next stabilize within the 1.3637-1.3663 trendline territory. Note that the 200-day EMA is approaching that region too.

Alternatively, if the bulls successfully close above 1.3880, surpassing the 1.3900 psychological mark as well, all the attention will turn to the 2022 top of 1.3976. Breaching that wall and rallying beyond the 1.4000 round level, where the 161.8% Fibonacci extension of April’s downfall is placed, the price could next challenge the 1.4050 region taken from May 2020.

Overall, if the price fails to rise above 1.3880-1.3900, traders could begin to think about profit-taking as the USDCAD chart keeps trading near a constraining zone after a green wave.

• WTI trades within symmetrical triangle
• 20- and 50-day SMAs are ready for bearish cross

WTI crude oil is moving back and forth from the 200-day simple moving average (SMA), with a strong resistance area near the potential bearish crossover between the 20- and 50-day SMAs. The price is developing within a symmetrical triangle in the medium-term timeframe, with no clear directional movement for now.

According to technical oscillators, the RSI is sloping slightly up beneath the neutral threshold of 50, while the MACD is trying to regain some momentum, but it remains below its trigger and zero lines.

If the market successfully surpasses the 200-day SMA, then it may head towards the next short-term SMAs near 79.90, ahead of the 80.50 resistance level. Even higher, the descending trend line from April 12 at 82.30 may halt bullish actions.

On the other hand, a slide to the downside could meet immediate support at 75.20 before penetrating the longer-term uptrend line and visiting the 72.70 and 71.30 support levels.

In summary, oil prices do not have a clear picture, and only a break above or below the diagonal lines could endorse the next tendency.

Cable remains in red in early Friday, following Thursday’s 0.9% drop (the biggest daily loss since Apr 10) as fresh risk aversion deflated sterling.

Bears extended to one-month low but find a footstep at 1.2706 (top of thick ascending daily cloud) and may pause here, as daily studies are becoming oversold and strong negative momentum started to fade.

However, near-term action is likely to remain quiet until release of US labor data, due later today, which would provide fresh direction signals.

US Nonfarm payrolls likely increased by 176K in July, weaker than June’s 206K, which points to slower but still healthy pace of growth, while unemployment and average earnings are expected to remain unchanged at 4.1% and 0.3% respectively.

Higher than expected NFP data in July would cool prospects for further rate cuts and inflate dollar, which would add fresh pressure on pound.

Conversely, sterling would appreciate weaker jobs data.

Penetration and close within daily cloud would add to negative structure and signal continuation of larger downtrend from 1.3044 (July 17 top), with key short-term support at 1.2615 (late June / early July higher base) expected to come in focus.

Broken Fibo support at 1.2779, reinforced by 55DMA, reverted to solid resistance, followed by daily Tenkan-sen (1.2822).

Res: 1.2751; 1.2779; 1.2800; 1.2822.
Sup: 1.2706; 1.2670; 1.2615; 1.2580.

Gold price started another increase and surpassed the $2,440 resistance. Crude oil is showing bearish signs and might decline below $75.00.

Important Takeaways for Gold and Oil Prices Analysis Today

• Gold price started a steady increase from the $2,420 zone against the US Dollar.
• A key bullish trend line is forming with support near $2,440 on the hourly chart of gold at FXOpen.
• Crude oil prices failed to clear the $78.20 region and started a fresh decline.
• There was a break below a connecting bullish trend line with support at $77.50 on the hourly chart of XTI/USD at FXOpen.

Gold Price Technical Analysis

On the hourly chart of Gold at FXOpen, the price found support near the $2,320 zone. The price remained in a bullish zone and started a strong increase above $2,400.

There was a decent move above the 50-hour simple moving average and $2,420. The bulls pushed the price above the $2,435 and $2,440 resistance levels. Finally, the price tested the $2,455 zone and the price is now consolidating losses.

The price is showing positive signs above the 23.6% Fib retracement level of the upward move from the $2,369 swing low to the $2,462 high, and the RSI is stable above 50.

Initial support on the downside is near $2,440. There is also a key bullish trend line forming with support near $2,440 and the 50-hour simple moving average. The first major support is near the $2,415 zone. It is close to the 50% Fib retracement level of the upward move from the $2,369 swing low to the $2,462 high.

If there is a downside break below the $2,415 support, the price might decline further. In the stated case, the price might drop toward the $2,390 support.

Immediate resistance is near the $2,445 level. The next major resistance is near the $2,450 level. An upside break above the $2,450 resistance could send Gold price toward $2,460. Any more gains may perhaps set the pace for an increase toward the $2,480 level.

Oil Price Technical Analysis

On the hourly chart of WTI Crude Oil at FXOpen, the price struggled to clear the $78.20 resistance zone against the US Dollar. The price started a fresh decline below the $77.00 support.

There was a break below a connecting bullish trend line with support at $77.50. There was a steady decline below the 50% Fib retracement level of the upward move from the $74.23 swing low to the $78.25 high.

The pair is now consolidating below the 50-hour simple moving average. Finally, the price tested the 61.8% Fib retracement level of the upward move from the $74.23 swing low to the $78.25 high.

If there is a fresh increase, it could face resistance near $77.00 and the 50-hour simple moving average. The first major resistance is near the $78.20 level. Any more gains might send the price toward the $79.50 level. Any more gains might call for a test of $80.00.

Conversely, the price might continue to move down and revisit the $75.20 support. The next major support on the WTI crude oil chart is $74.20.

If there is a downside break, the price might decline toward $73.50. Any more losses may perhaps open the doors for a move toward the $72.50 support zone.

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• AUDUSD extends retreat to its lowest since May 1
• Oscillators are flagging oversold conditions

AUDUSD has been in a steady retreat since July 11, violating both its 50- and 200-day simple moving averages (SMAs). Although the pair posted a fresh two-month low on Wednesday, the risk of a bounce to the upside has increased given that the momentum indicators are warning of an overdone decline.

Should bearish pressures persist, the bears may attack the recent two-month bottom of 0.6479. A violation of that zone could open the door for the February low of 0.6441. Failing to halt there, the pair could descend towards its 2024 low of 0.6363.

On the flipside, if the price reverses back higher, initial advances could stall at 0.6558, a region that acted as both support and resistance in recent months. Slicing through that hurdle, the pair could face 0.6618 ahead of the April-May resistance of 0.6643. Higher, attention might shift to the May peak of 0.6713.

In brief, AUDUSD has come under heavy selling pressure in the short term, losing more than 4.5% from its July high. However, the bears should be cautious as the short-term oscillators are signalling oversold conditions.

Daily Pivots: (S1) 190.80; (P) 194.20; (R1) 196.23; More...

Intraday bias in GBP/JPY remains on the downside for the moment. Current fall from 208.09 is in progress for 185.49 fibonacci level. On the upside, above 193.96 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, considering bearish divergence condition in W MACD, 208.09 might be a medium term top and fall from there could already be correcting whole up trend from 148.93 (2022 low). Risk will now stay on the downside as long as 55 D EMA (now at 199.51) holds. Deeper fall would be seen to 38.2% retracement of 148.93 to 208.09 at 185.49.

Daily Pivots: (S1) 160.76; (P) 163.65; (R1) 165.29; More...

Intraday bias in EUR/JPY remains on the downside for the moment. Current fall from 175.41 should target 155.91 fibonacci level next. On the upside, above 163.41 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, break of 164.29 resistance turned support indicates that fall from 175.41 medium term top is at least correcting the rise from 124.73, with risk of bearish trend reversal. Deeper decline would be seen to 38.2% retracement of 124.37 to 175.41 at 155.91. This will now remain the favored case as long as 55 D EMA (now at 168.85) holds, even in case of strong rebound.

Daily Pivots: (S1) 0.8409; (P) 0.8429; (R1) 0.8441; More....

Immediate focus is now on 0.8498 resistance in EUR/GBP as rebound from 0.8382 accelerates higher. Decisive break there will indicate that fall from 0.8643 has completed with five waves down to 0.8382. Further rally should then be seen to channel resistance (now at 0.8560). Nevertheless, rejection by 0.8498 will retain near term bearishness for another fall through 0.8382 later.

In the bigger picture, down trend from 0.9267 (2022 high) is in progress. Next target is 0.8201 key support (2022 low). For now, outlook will remain bearish as long as 0.8643 resistance holds, even in case of strong rebound.