Morning Forex Overview July 8th

By: Dukascopy 
EURUSD traded up to test resistance at 1.40 in late New York last night before Asia took the pair back down to the 1.3900 level. Cable too remained very much range-bound, claiming back most of Mondays losses during the course of the New York session just to get sold off in the Far East this morning.

Main driver for the US Dollar was Australia's RBA announcement to leave interest rates unchanged at 3%. This was in-line with market expectations but the statement accompanying the decision confirmed that the present outlook will rather point to further easing despite considerable signs of strength coming from the Chinese economy.

USDJPY rebounded to 95.40 before the pair came under pressure midway through the Asian session. The pair is currently completely uncorrelated to the European pairs and great trading opportunities can be found in the Yen-crosses. Both EURJPY and GBPJPY are currently challenging important support levels and intra-day volatility may quickly rise in the short-term.

Market expectation
UK industrial and manufacturing production was released lower than expected this morning. Cable saw a quick to widen the days low down to 1.6150 before bouncing on take-profit orders.

Expect this afternoon to be fairly range-bound in the absence of important US data. EURUSD should range around 1.3930 with sellers lined up higher between 1.4050 and 1.4130. To the downside, 1.3880 is strong initial support, a break there may lead to 1.3760. Cable is bound to remain between 1.6160 and 1.6300 for now, here too there seem to be sellers waiting for better levels and the risk lies to the downside to attack the 1.60 level next. USDJPY finally is thought to be driven by the crosses. For now the 95.00 level is well supported, a break there may lead to a larger movement lower over the next few weeks.
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