July 14, 2021 13:54:55

There’s been a lot of event risk this week with bumper US inflation data vying with central bank hawkish surprises, progress on the US infrastructure deal and Jay Powell’s semi-annual testimony. The latter was probably most anticipated in markets and he hinted that the Fed will provide advance notice before announcing any Fed changes. Essentially, there is still no rush to hike rates and this has seen stocks go bid and the dollar swoon.

Safe haven currencies, CHF and JPY are still the top performing major currencies on the month, but with such a changing landscape, what are the technicals saying?

USD/JPY battling with trend support

After USD/JPY dropped sharply on risk off last Thursday, we mentioned last time how we might see a pullback or consolidation. That’s exactly what happened with the 23.6% Fib level of the January low to July high move at 109.53 acting as support. Prices are now trading around the trendline support from the April low with the sellers winning the battle today with the line acting as resistance. Bearish momentum is picking up on the MACD so the 50-day SMA at 109.84 is initial support just above last week’s low and Fib level at 109.51/53. If the pair can get above the upward trendline, then the previous cycle high at 110.96 is in view ahead of the year-to-date high at 111.65.

USD/CHF mid-range

This major looked like it was going to break higher but last week saw a sharp (risk-off) selloff with prices moving below the swing low. Support has been found around the 100-day SMA and further help from this week’s low at 0.9131 will be key if bulls want to see more upside. A Fib level of the high to low move of the year sits at 0.9199 before the recent cycle July highs at 0.9274. That said, bearish momentum on the MACD has picked up in this pair too so if we do break below this week’s low, the 200-day SMA lies at 0.9072.