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Chart of the Day: USDJPY

The JPY has entered the new quarter on a high note — certainly against the GBP, SEK and CHF. Given the market has used the JPY to hedge uncertainties in the global economy, there are few surprises here. Along with gold and bonds, the JPY has once again proved to be a classic safe haven.

Chart of the Day - July 9, 2019 - USDJPY daily

The USDJPY has halted around major resistance at 108.70/50 area mark, ahead of Federal Reserve Chair Jerome Powell’s speech 00:00 AEST on Thursday, which is then followed by the FOMC minutes. Given this is a significant event risk for the market, with Powell set to guide the market on interest-rate expectations for the July FOMC, the USDJPY might see increased volatility. It’s clearly a risk event for FX markets.

While the pair has bounced back strongly from 106.78 low, its short- to medium-term downtrend from April highs is still in play. But if Powell’s testimony is laced with optimism, the USD bulls may assert even further dominance, pushing price through the major high at 108.805 (also the neckline of the inverse head and shoulders pattern). A strong break with a close above this level will most certainly attract buyers.

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