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AUD/JPY Price Declines below 113.50, while maintaining bullish near‑term structure

  • AUD/JPY softens to near 113.45 in Thursday’s early European session. 
  • The cross maintains a constructive outlook, with bullish RSI momentum. 
  • The immediate resistance level is seen at 113.70; the initial support level to watch is 112.65. 

The AUD/JPY cross trades in negative territory around 113.45 during the early European trading hours on Thursday. Verbal intervention from Japanese authorities provides some support to the Japanese Yen (JPY) against the Australian Dollar (AUD). 

Japan’s Finance Minister Satsuki Katayama said on Thursday that the authorities are ready to take appropriate action on currency anytime as needed. She added that the officials will track market trends and economic data to ensure fiscal sustainability.

Senior officials from the Bank of Japan (BoJ) noted that a delay in stimulus adjustment amid high inflation risk could trigger an economic downturn. However, a Reuters survey showed earlier Thursday that nearly half of Japanese firms are experiencing negative business impact from the BoJ’s interest rate hikes, with higher borrowing costs hurting bottom lines and discouraging capital investment. 

Chart Analysis AUD/JPY

Technical Analysis:

In the daily chart, AUD/JPY holds a bullish near-term bias as price remains above the 100-day Simple Moving Average (SMA) and the Bollinger Bands 20-period middle band, suggesting the broader uptrend is still supported despite recent consolidation. The latest Relative Strength Index (14) reading around 57 keeps momentum on the constructive side, hinting that buyers retain control as long as the pair stays comfortably above the lower Bollinger band at 111.10.

On the topside, initial resistance emerges at the Bollinger upper band around 113.70, where a sustained break would open the door to the May 13 high of 114.74.

On the downside, the first layer of support is seen at the 100-day SMA at 112.65, followed by the Bollinger middle band near 112.40, while a deeper pullback towards the lower band at 111.10 would be needed to seriously challenge the prevailing bullish structure.

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Euro consolidates near four-week top, above mid-1.1400s amid mixed Fed cues, geopolitics

  • EUR/USD struggles to attract follow-through buying amid mixed fundamental cues.
  • Receding Fed rate hike bets keep USD bulls on the defensive and support spot prices.
  • Escalating US-Iran tensions and inflation fears help limit USD losses, capping the pair.

The EUR/USD pair holds steady above the 1.1450 level during the Asian session on Thursday and consolidates its strong gains registered over the past two days, to the highest level since June 18.

The US Dollar (USD) struggles to attract any meaningful buyers and languishes near a four-week low, touched on Wednesday following the release of the US Producer Price Index (PPI). In fact, the US Bureau of Labor Statistics (BLS) reported that the PPI unexpectedly fell 0.3% in June. This comes on top of a soft US Consumer Price Index (CPI) report on Tuesday and further prompts traders to trim their bets for an immediate rate hike by the US Federal Reserve (Fed). The outlook, in turn, keeps USD bulls on the defensive, which is seen as a key factor acting as a tailwind for the EUR/USD pair.

Meanwhile, the US-Iran conflict has intensified since the beginning of this week, with US forces launching a fresh round of airstrikes targeting Iranian missile and drone infrastructure on Wednesday. Tehran, on the other hand, has responded with retaliatory drone and missile attacks on US-linked military facilities across the region. Adding to this, the US naval blockade of Iranian ports and the closure of the Strait of Hormuz support elevated crude oil prices. This fuels concerns about energy-driven inflation and revives hawkish Fed expectations, limiting USD losses and capping the EUR/USD pair.

Traders now look forward to the US economic docket – featuring monthly Retail Sales, the Philly Fed Manufacturing Index, and the usual Weekly Initial Jobless Claims. This, along with speeches from influential FOMC members, would drive the USD demand and provide some impetus to the EUR/USD pair. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before placing fresh bullish bets and positioning for any further appreciating move.

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South Korean Won edges up against US Dollar as BoK hikes interest rates

  • The South Korean Won ticks up against the US Dollar as BoK raises interest rates for the first time in three-and-a-half years.
  • The BoK was expected to hike policy rates to counter persistent inflationary pressures.
  • Traders have dialed down the Fed’s interest rate hike expectations as US inflation cools down.

The South Korean Won (KRW) reflects broader strength against the US Dollar (USD) as the Bank of Korea (BoK) delivers its first interest rate hike in three-and-a-half years, raising rates by 25 basis points (bps) to 2.75%. The USD/KRW pair gives back slight early gains and ticks down to near 1,484.68 in the Asian trade on Thursday.

The pair will likely remain firm as the BoK has kept the door open for further interest rate hikes, in an attempt to stabilize a slumping KRW and tame persistent price pressures. “We will respond until inflation stabilizes to BoK’s target level,” BoK Governor Hyun-Song Shin said in a statement. Shin added, “Demand side price pressure may need careful monitoring as it can turn into stronger inflationary pressure if robust increase in Gross Domestic Income (GDI) sustained.”

The Asian currency has been outperforming the US Dollar for over two weeks, as market participants had already priced in an interest rate hike by the BoK.

Meanwhile, the US Dollar strives to regain ground after a sharp sell-off in the last two trading days. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 100.50.

The USD Index fell sharply in the past two trading days as soft United States (US) inflation figures on both the retail and the wholesale level have forced traders to reconsider Federal Reserve (Fed) interest rate expectations.

According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in the July meeting have dropped significantly to 10.2% from 31% recorded a week ago.

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British Pound weakens below 1.3550 on renewed US strikes on Iran

  • GBP/USD softens to around 1.3530 in Thursday’s early Asian session. 
  • The US military launched another wave of strikes against Iran. 
  • Rising tensions in the Middle East have prompted traders to increase bets on BoE rate hikes this year. 

The GBP/USD pair declines to near 1.3530 during the early Asian session on Thursday. The British Pound (GBP) weakens against the US Dollar (USD) as renewed conflict and shipping disruptions in the Strait of Hormuz have reignited energy-driven inflation risks. Traders brace for the UK monthly Gross Domestic Product (GDP) report and the US Retail Sales data, which are due later on Thursday. 

The US military said it has launched another wave of strikes against Iran in a further effort to keep the Strait of Hormuz open, per the Guardian. Explosions were reported late on Wednesday on Iran’s Qeshm Island, Bandar Abbas, and locations in the Sistan-Baluchestan province.

Iran’s top negotiator, Mohammad Bagher Ghalibaf, said that if Iran did not benefit from its memorandum of understanding with the United States, “We have no reason to adhere to such an understanding.” Rising tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair in the near term. 

Andy Burnham is expected to be officially named UK Prime Minister on July 20, pushing the focus onto his choice of finance minister, given the nation’s shaky public finances.

Traders raise their bets on rate hikes from the Bank of England (BoE) this year, given the expected impact on inflation from higher oil prices.

Money markets are fully pricing in a hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters. Before the US-Iran war, traders had been expecting the BoE to lower interest rates twice this year.

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Japanese Yen strengthens on intervention warning, cooling US inflation

  • USD/JPY edges lower to around 162.15 in Thursday’s Asian session. 
  • Japan’s Katayama said ready to take appropriate action on currency anytime as needed. 
  • Cooling US inflation curbs Fed rate hike bets. 

The USD/JPY pair loses ground to near 162.15 during the Asian trading hours on Thursday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) after verbal intervention from Japanese authorities. Traders await the release of the US June Retail Sales data later on Thursday for fresh impetus. 

Traders remain on alert for possible intervention from Japanese officials. On Thursday, Japan’s Finance Minister Satsuki Katayama said that the authorities are ready to take appropriate action on currency anytime as needed. She added that the officials will track market trends and economic data to ensure fiscal sustainability. 

Softer-than-expected US inflation data reinforced bets that the US Federal Reserve (Fed) can stay ‌patient on interest rate hikes, weighing on the Greenback. Data released by the US Bureau of Labor Statistics (BLS) on Wednesday showed that the US Producer Price Index (PPI) rose by 5.5% YoY in June, versus 6.0% in May (revised from 6.5%). This reading came in below the market consensus of 6.2%. 

On a monthly basis, the PPI declined by 0.3%, compared to the 0.6% increase recorded in May (revised from 1.1%) and improved compared with the estimate for no change.

The probability for a rate hike in July was slashed to 9.6%, versus a 45% implied ‌probability at the start of the week. Markets still see even odds of at least a 25 basis points (bps) increase in September, according to the CME FedWatch tool. 

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EUR/JPY Price Positions near ascending triangle top around 186.00

  • EUR/JPY near the 186.10 ascending triangle ceiling suggests building bullish pressure.
  • The 14-day Relative Strength Index at 56 indicates positive, sustainable upward momentum.
  • The currency cross could find the initial support at the nine-day EMA at 185.35.

EUR/JPY depreciates after three days of gains, trading around 185.90 during the Asian hours on Thursday. The currency cross is retaining a constructive bullish bias as it holds above both the nine-period and 50-period Exponential Moving Averages (EMAs). The 14-day Relative Strength Index (RSI) around 56 suggests positive but not overextended momentum, hinting that buyers still control the near-term tone.

The daily chart technical analysis shows the EUR/JPY cross positioning near the upper boundary of an ascending triangle around 186.10, suggesting that price crowding right against that flat ceiling indicates that buyers are aggressively absorbing all selling pressure at that level. This positioning shows immense bullish pressure. Since the dips are getting shallower, staying near the top suggests a breakout above resistance is likely building up.

A decisive daily close above this upper boundary typically triggers a powerful bullish continuation, which could expose the all-time high of 187.95, which was recorded on April 17.

On the downside, primary support lies at the nine-day EMA at 185.35, followed by the 50-day EMA at 185.05. Further declines would put downward pressure on the EUR/JPY cross to test the ascending triangle’s lower boundary around 184.70. A break below the triangle would expose the four-month low of 181.87, recorded on March 16, and the six-month low of 180.81.

Chart Analysis EUR/JPY
EUR/JPY: Daily Chart

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.00%0.12%-0.05%0.08%0.09%0.12%0.11%
EUR-0.00%0.11%-0.04%0.08%0.19%0.13%0.10%
GBP-0.12%-0.11%-0.15%-0.02%0.06%0.02%0.00%
JPY0.05%0.04%0.15%0.09%0.20%0.16%0.15%
CAD-0.08%-0.08%0.02%-0.09%0.10%0.07%0.05%
AUD-0.09%-0.19%-0.06%-0.20%-0.10%-0.01%-0.05%
NZD-0.12%-0.13%-0.02%-0.16%-0.07%0.01%-0.03%
CHF-0.11%-0.10%-0.01%-0.15%-0.05%0.05%0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

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Swiss Franc holds losses as US Dollar recovers on Middle East tensions

  • USD/CHF remains stronger as the US Dollar recovers, fueled by safe-haven buying and prolonged high Fed rates.
  • June CPI and PPI reports fell below market expectations, temporarily easing immediate fears of further rate hikes.
  • Swiss Franc safe-haven demand, fueled by oil supply disruptions and rising inflation fears, points to further downside for USD/CHF.

USD/CHF inches lower after opening at a bullish gap, remaining in positive territory and trading around 0.8060 during the Asian hours on Thursday. The pair holds ground as the US Dollar (USD) recovers its daily losses amid rising risk aversion, which could be attributed to United States (US)-Iran tensions boosting oil prices and sparking fresh inflation concerns. This geopolitical friction threatens to prolong the Federal Reserve’s (Fed) higher interest rate environment.

The Guardian reported that the US Central Command (CENTCOM) launched another wave of strikes as part of a concerted effort to keep the critical Strait of Hormuz open. In a direct escalation of hostilities, CENTCOM confirmed that US aircraft fired missiles into an oil tanker’s smokestack within the strategic passage, effectively disabling the vessel and keeping global markets on edge.

Amid this escalating conflict in the Middle East, traders are closely assessing the Federal Reserve’s policy outlook in light of recently softened US inflation data. Tuesday’s US Consumer Price Index (CPI) declined to 3.5% in June from the three-year high of 4.2% set in May, coming in well below the market expectation of 3.8%. This weaker consumer inflation data initially helped reduce immediate concerns that the Fed would soon raise interest rates.

CME FedWatch Tool suggests that markets scaled back expectations for a Fed rate hike in September, with the implied probability falling to around 44% from 50% just a day earlier. However, because the interim US-Iran peace agreement reached last month has effectively unraveled, June’s inflation data does not yet capture the economic impact of this latest military escalation between the US and Iran.

Further supporting this cooling trend, Wednesday’s data showed the US Producer Price Index (PPI) declined to 5.5% on a yearly basis in June, down from 6% in May and below the market expectation of 6.2%. On a monthly basis, the PPI dropped by 0.3%, a notable shift from the 0.6% increase recorded in May and an improvement compared to analysts’ estimates of no change.

The USD/CHF pair faces further downside as rising inflation fears, triggered by oil supply disruptions, fuel safe-haven demand for the Swiss Franc (CHF). Meanwhile, the Swiss National Bank (SNB) maintained its policy rate at 0%. The central bank reconfirmed its readiness to step into the foreign exchange markets to prevent an excessive appreciation of the franc and shield the economy from imported inflation.

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Senior BoJ official: Delay in adjustment amid high inflation risk could trigger economic downturn

Senior officials from the Bank of Japan (BoJ) said on Thursday that a delay in stimulus adjustment amid high inflation risk could trigger an economic downturn. 

Key quotes

Delay in stimulus adjustment amid high inflation risk could trigger economic downturn. 

Suitable monetary policy would ensure stable inflation, place economy on sustainable growth trajectory. 

When upside inflation risk high as is the case now, delay in adjusting degree of stimulus could materialise such risk, lead to economic downturn in future.

Market reaction 

At the time of writing, USD/JPY is down 0.06% on the day at 162.09.