Technical Analysis

The ongoing purge in carry trades continues to benefit low-yielding currencies, particularly the yen and the Swiss franc. USD/JPY broke below the key support level at the 100-day moving average (155.37) on Wednesday, sparking increased downside momentum and hitting a low of 153.10, the lowest level since early May.

GBP/USD downside is likely to be limited after bears failed to hold a break below 1.29 on Tuesday.

The yen rose on Monday, but its rallies ahead of the Bank of Japan's (BoJ) July 31 policy meeting may remain fragile until the forex market receives clearer signals of the BoJ's intent to hike rates.

As the weekend approached, EUR/USD was under pressure, with New York opening near 1.0885 after trading between 1.09017 and 1.08760 overnight.

EUR/USD traded lower on Thursday after the European Central Bank (ECB) left rates unchanged, as expected.

The yen's recent rise has significant implications for other currencies as many investors have sold the yen to fund their investments in carry trades.

GBP/USD retreated further from recent highs near 1.30 after hotter-than-expected U.S. June retail sales slightly dialed back expectations for Federal Reserve rate cuts.

EUR/USD reached a four-month high on Monday but faced investor indecision as the session progressed.

GBP/USD rallied to a 2024 peak of 1.2975, undeterred by higher-than-expected U.S. producer price inflation, as the pair continued its gradual climb towards the July 2023 highs above 1.30.

There's no doubt among most Tokyo traders that Japan's Ministry of Finance (MOF) ordered a fresh round of FX intervention following the U.S. consumer price report on Thursday.