Dollar/Yen: Narrow range 94.19-94.90, Wide range 93.40-95.06
The dollar/yen is expected to fluctuate within a range. Investor risk aversion increased due to the US stock market giving back gains and closing essentially flat, leading to the unwinding of yen-funded carry trades, which is unfavorable for this exchange rate. Selling by Japanese exporters and declining yields on US Treasuries also pressured this rate, but demand for dollars from Japanese importers for trade settlement and positive US economic data limited the decline in the dollar/yen. The daily chart indicators for the dollar/yen are mixed; the MACD is bearish, but the stochastic oscillator is bullish in the oversold region.
Euro/Dollar: Narrow range 1.4278-1.4359, Wide range 1.4199-1.4375
The euro/dollar is expected to consolidate. Factors weighing on this exchange rate include: cooling investor risk appetite triggering the unwinding of euro-funded carry trades, and spillover effects from the pound's weakness; however, the fall in this rate is limited due to better-than-expected new industrial orders in the EU in June. The daily chart indicators for the euro/dollar are unclear, as the stochastic oscillator is bullish, while the MACD is neutral; an inside day pattern has formed yesterday.
Pound/Dollar: Narrow range 1.6389-1.6522, Wide range 1.6372-1.6546
The pound/dollar is expected to decline, with cooling investor risk appetite, concerns over the UK's massive government debt, and uncertainties surrounding the Bank of England's quantitative easing policy adversely affecting the exchange rate. The daily chart for the pound/dollar is bearish, with both the MACD and stochastic oscillators issuing sell signals.