Forex snapshot

The dollar is rampant this afternoon, after an impressive US GDP reading that banished the gloom of the first quarter.

¥1000 notes
Source: Bloomberg

USD/JPY eyes ¥102.70-80 region

The dollar has raced to its highest level since the beginning of June, after a remarkably strong US GDP reading for Q2 that exceeded expectations.

Q1 figures were revised up to -2.1%, so the picture on the US economy is a brighter one. It is not rapid progress, but rather a steady kind of progression. Meanwhile ADP numbers showed weaker-than-expected job growth, at 218K rather than the expected 230K, and down from the 288K seen last month.

Looking at USD/JPY, the bounce today has carried us well away from the 200-day moving average, but now we need to clear the ¥102.70-¥102.80 region from the beginning of June. The daily relative strength index is recording an overbought reading, which leads to the possibility of a retracement in the coming days. Beyond the June high of ¥103, the ¥104 level should prove to be resistance.

On the downside, the close confluence of the 50-, 100- and 200-DMAs should provide ample opportunity for support, with ¥101 beyond that.

USD/CAD rally continues

The US dollar’s rally versus the Loonie is apparently unstoppable, although at $1.0980 the currency pair is looking overbought on a daily RSI.

The challenge for USD/CAD now is to breach the 100-DMA and the June high of $1.0950. Interestingly we are also now running into the 20-week moving average, which could slow progress, but the weekly stochastics indicate that buying pressure is still abundant.

On the downside the 200-DMA should be support, around the $1.0839 mark, while the rising trendline from the July lows should also help if the pair succumbs to profit-taking.

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