Even though the USD remains weak, the JPY continues to struggle because the pandemic keeps spreading across japan.
The Identical Symmetry
The current technical setup seems highly attractive. The last lap of the asymmetrical pattern is about to start. Thus, the USD/JPY could slide below 108.51 in about three weeks. It took almost eight weeks for the first leg of the symmetrical pattern to attain its peak. When it eventually did early last month, it commenced its second leg (the reversal pattern). What’s most appealing about this chart is the similar pattern between its peaks and troughs.
USD/JPY 24-hour chart. Source: IG
Even though it keeps hitting those higher highs and lower lows, it has been consistent in doing that. For instance, there was a pullback on the five most recognizable peaks in the first leg of the symmetry before it set a new higher high. Most of the pullbacks were almost hitting the lower lows before gathering enough momentum for another bullish run.
The same pattern has also been established in the second leg of the symmetry. The three lowest corrections pulled back over the 110.51 level before declining further. This pattern is starting to repeat itself now. The high pullbacks are taking some time before consolidating. But a break over the 110.51 is likely in less than five days. Also, there would be a reversal around the 10.55.
USD Is Key To The Next GBP/USD Price Action
The Jackson Hole symposium is the talk of the town among traders. Hence, GBP is maintaining the 1.3755 range against the USD. Jerome Powell’s speech tomorrow is the much-awaited speech for traders, even though the symposium starts today with other keynote speakers making their speeches.
The fast spread of the pandemic in the country has lowered expectations among traders that the fed could release a schedule of reducing its stimulus package. Hence, some analysts predict that next week’s non-farm payroll data will be critical to any decision the fed will take in its next FOMC session.
However, the USD might continue to suffer until that time. Unfortunately, things aren’t much better in the UK despite a successful rollout of the COVID-19 vaccine. Various data show that almost 90% of those over the age of 16 have received double vaccine doses (a considerable success rate). The fast spread of the delta variant is undermining the success the vaccination program has achieved so far.
In less than one month, the UK has recorded almost 150 deaths, and the authorities might be forced to make a change of plans in the next few weeks if things don’t change. This would be a crucial decision to make since a fresh academic calendar usually begins in September.
The reversal of the GBP/USD from around 1.3610 is a sign of the weakening of the USD. Aside from the pandemic data, the GBP doesn’t have any short-term fundamentals driving its growth. Hence, the GBP/USD will likely be in a bounce till tomorrow.