The US dollar held near its recent highs versus the yen, the euro and pound sterling as 10-year treasury yields rose towards 2.50% during New York trading and markets awaited key risk events and data in the last three days of the week.
Specifically, the next three days will feature the monetary policy decision, the advance estimate of the economic growth rate for the second quarter and the number of jobs created during July in the United States.
Eurozone flash inflation will also come out. Therefore, it’s reasonable for traders not to risk putting on big positions ahead of all this very important data – especially concerning the US dollar.
Data out of Japan today was mixed, with June retail sales and unemployment disappointing while household spending fell less than expected during the same month. Overall the data had a negative impact and this allowed the dollar to rise to almost 102 yen at 101.98, while the euro also moved close to the 137 level at 136.96.
Sterling pushed the euro back towards the 79 pence level -near a 2-year low as the euro was seen as being vulnerable to geopolitical tensions between Russia and the West. In addition, recent data such as the German IFO survey, have raised some questions about the Eurozone’s economic recovery.
On the other hand, Sterling was overvalued, according to the IMF by about 5-10%. Looking ahead, UK monetary data as well as consumer confidence in the United States will be key. Case – Shiller home prices will also be looked at.
EURJPY bearish at 2014 lows
The EUR/JPY maintains its bearish bias and is heading for the 2014 low of 136.21 touched on February 2. This level is a strong support level which if broken will accelerate losses towards 135.42, which is the 38.2% Fibonacci retracement level of the upleg from 118.72 to 145.65. The daily tenkan-sen and kijun-sen lines are negatively aligned and reinforce medium-term bearish bias.
Also, the daily Ichimoku cloud is acting as a barrier to the upside. Momentum indicators are signaling further potential downside – RSI and MACD are in bearish territory. Meanwhile, prices are below the 200-day moving average, also a bearish signal. 
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