Current trend

An unexpected decision by the People’s Bank of China to devaluate the Yuan by about 1.9% to support the national economy increased market volatility. Gold grew, while oil prices and commodities currencies fell. Nikkei Stock Average closed at 1.6% below.

The USD fall across the market suggests that investors start doubting the chances of the interest rate hike in the US in September. Thus, it is important to watch the Fed’s William Dudley Speech today.

Tomorrow pay attention to the data on Machinery Orders for June in Japan and Retail Sales for July in the US.

The fundamental factors suggest a further growth in the pair.

Support and resistance

OsMA and Stochastic on the daily chart give buy signals, while on the 4-hour chart they are heading towards the zero line and if cross it successfully, the correction continues.

A breakdown of the level of 123.15 (38.2% Fibonacci) would allow the pair to fall to 122.35 (50% Fibonacci), 121.60 (61.8% Fibonacci). A fall below 120.00 is unlikely.

Support levels: 124.50 (ЕМА50 on the 4-hour chart), 124.10 (23.6% Fibonacci), 124.00 (ЕМА144), 123.80 (ЕМА200), 123.15.

Resistance levels: 124.50, 125.00.

Trading tips

Open long positions from the levels of 123.80, 124.00, 124.10, 124.50 with targets at 125.00, 125.65 and stop-loss at 123.40.

Short positions can be opened after the breakdown of the level of 123.15 with targets at 122.35, 121.60. 

USD/JPY: Yuan devaluation

USD/JPY: Yuan devaluation

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