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.
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(Randolph Donney is a Reuters market analyst. The views expressed are his own.)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.