The low today hit 109.72 and that nears a test of daily support from the 21 June low @ 109.71. That will be a key level to watch ahead of the close before the 50.0 retracement level @ 109.57 comes into play again – as we saw last week.

There hasn’t been a coherent theme in the market in trading this week with equities and bond yields bouncing higher earlier only to see a retreat over the past day or so.

In particular, 10-year yields have come off the high around 1.42% on Tuesday to fall just below 1.32% currently in European morning trade today.

Going back to USD/JPY, as price action continues to tussle around this area, the 100-day moving average (red line) – now seen @ 109.35 – will also draw closer and may play a key technical role in dictating which direction the pair moves next.

Tomorrow’s US retail sales data may be a catalyst for a move so just be wary of that.

It was a packed day of news but it didn’t translate into a straight-forward day of trading. No single theme or news item captured the market’s imagination. Early on, Powell’s words boosted the risk trade and weighed on the dollar but that faded later.

In Canadian dollar trading, the market clearly wanted more in terms of tapering or positioning the BOC for earlier rate hikes but it didn’t come. Macklem stressed higher confidence in the recovery and bumped up growth forecasts but the timeline on the output gap closing stayed in H2 and the loonie fell. Sinking oil prices after looser US inventory data also didn’t help.

USD/JPY was weighed down as the bond market came back to life. Yields were persistently pressured, perhaps with the Democrat’s infrastructure plan to be paid for. Powell’s lack of urgency on inflation was another culprit.

The antipodeans managed to hold onto earlier bids after the RBNZ taper surprise. Aside from oil, commodities were solid.

The euro staged somewhat of a recovery after yesterday’s rout. That’s the name of the game at the moment with few lasting trends as we sort through the summer doldrums.