Failed rallies in USDJPY are becoming increasingly interrupted by sharp 100-point declines occurring in 2-hour intervals. This highlights the ease at which the reduction in risk appetite is disrupting financial markets. Bernanke's speech did lift the dollar from 106.80 to 107.20 after the Chairman said the central bank will extend the liquidity lifeline to banks. USDJPY faces resistance at 107.30, followed by the 200-day MA of 107.55. Subsequent run-up remains capped at the trend line resistance of 107.90. Support stands at 106.55.
Sterling Extends Declines After Bernanke
The impact positive dollar impact from Bernanke's speech is expected to be especially punishing for GBP as the deteriorating UK fundamentals remove resistance facing the offers. Much speculation will emerge on whether the Bank of England will cut rates this Thursday, which will dictate fresh volatility in the currency. We expect the decision to be a close call in favor of no rate cut at which point the reaction is likely to be of further GBP losses. Support stands at $1.9705, followed by 1.9660.
Sterling Extends Declines After Bernanke
The impact positive dollar impact from Bernanke's speech is expected to be especially punishing for GBP as the deteriorating UK fundamentals remove resistance facing the offers. Much speculation will emerge on whether the Bank of England will cut rates this Thursday, which will dictate fresh volatility in the currency. We expect the decision to be a close call in favor of no rate cut at which point the reaction is likely to be of further GBP losses. Support stands at $1.9705, followed by 1.9660.