FX Daily Strategy: Asia, Jul 3

Rather Empty calendar should see market participants attention return to the Middle East. The Doha meeting has proven fruitless with the U.S.-Iran still figuring out Strait of Hormuz logistics. It is clear Trump is utilizing maximum pressure tactics while Iran continues to play hardball. It is just a straw away from being too heavy. One can only hope for better results in background negotiations.

On the chart, there is little change as prices extend cautious trade within the 101.00 - 101.50 range. Rising intraday studies are keeping focus on resistance at 101.50. But unwinding overbought daily stochastics and the deteriorating daily Tension Indicator should limit any immediate break in renewed consolidation beneath critical resistance at the 101.80 current year high of 24 June, before rising weekly charts prompt further gains. A close above here will turn sentiment positive and extend January gains beyond congestion around 102.00 towards 102.85/00. Meanwhile, a break below congestion support at 101.00 should give way to consolidation above the 100.64 monthly high of 31 March.

Reuters reported that the MoF and BoJ have likely changed their tactics in intervention. Very likely the Japan side will intervene without previous 'jawboning" attempt. It seems to be a reaction of the lack of effect of verbal intervention and a return of element of surprise to keep speculators frosty. The latest slump in USD/JPY does not look like a classic intervention attempt, given the limited magnitude. But such new guidelines will keep market participants on guard.

On the chart, consolidation break to fresh high at 162.84 as prices unwind overbought intraday studies. Bullish momentum keep pressure on the upside and further gains cannot be ruled out to target 163.00 congestion. Higher still will see scope to 164.00 high of December 1986. Meanwhile, support is raised to the 161.95, the 2024 year high, which should underpin. Would take break here to open up room for deeper correction of the strong gains from the 155.00 May low towards strong support at the 161.00/160.72 congestion and April high.