BUZZ-COMMENT-USD/JPY bulls stumble after nasty Fibo top rejection

Credit: REUTERS/THOMAS WHITE

July 20 (Reuters) - USD/JPY's surge to 107.57 on the Japanese fix, coupled with miserable Japanese exports , completed a 61.8% Fibo of July's 108.16-6.635 EBS drop. This shifts the focus back to the pattern of higher daily lows since July 15 as the yen and the dollar continue to vie for top-haven currency status.

A close below Friday's 106.94 low would undermine the recovery from July's 106.635/67 lows and refocus on weekly kijun support at 106.70, and whether the May-June lows, by 106, can handle another bearish assault. A 107.57+ close is needed to squeeze some recent shorts.

Traders will also be watching the reaction to the EU summit's fourth day of deliberation over its rescue fund and 2021-27 budget . EUR/JPY, which tends to be positively correlated with USD/JPY, is well off its highs, but the dollar index has found support by June's low, so there are mixed signals again for USD/JPY.

With little major U.S. data until later in the week, the focus will be on pandemic news and Congressional efforts at a fifth coronavirus relief bill. Meanwhile, the 21- and 30-day moving average convergence at 107.22 may be a magnet without major EU or US news today.

For more click on FXBUZ

Charthttps://tmsnrt.rs/39hpLFs

(Randolph Donney is a Reuters market analyst. The views expressed are his own.)

((Randolph.donney@thomsonreuters.com))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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