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The greenback is weaker this Monday, with USD/JPY trading sub-106.00 as investors start the week with caution, ahead of the US Federal Reserve decision. Dollar weakness points to a steeper slide once below 105.50, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The market kick-started the week with a positive mood, amid news indicating Oxford and AstraZeneca restarting the tests of their coronavirus vaccine. However, investors remain cautious ahead of the Fed’s decision next Wednesday. Asian indexes gained some ground, although European ones are struggling below their opening levels.”

“Japan published the Tertiary Industry Index for July, which fell 0.5%, missing the market’s expectations. Industrial Production in the same month was up 8.7%, while Capacity Utilization improved to 9.6%, both beating expectations. The US won’t publish relevant macroeconomic data this Monday.”

“The USD/JPY pair keeps trading within familiar levels, neutral-to-bearish in the short-term. The 4-hour chart shows that the price keeps hovering around congesting moving averages, while technical indicators have limited bearish strength, standing within negative levels. Chances are of a steeper decline on a break below 105.50, the immediate support.”