The USD/JPY finally triggered stops above the 124.45 strong static resistance level, and advanced to a fresh 2-month high of 125.00 before retreating some, holding anyway well into the green by the end of the day where the price of Cable finally recovered after the Market Services News.
Having been consolidating below the mentioned 124.45 for most of the first two sessions of the day, the USD/JPY pair fell down to 124.01 after the release of poor US data, from where the pair bounced sharply higher and extended to the mentioned daily high.
The 1 hour chart shows that the price remains well above its 100 and 20 SMAs, whilst the technical indicators are resuming their advances after correcting overbought readings, pointing for a continued advance.
In the 4 hours chart, the Momentum indicator has turned lower, but holds above its 100 level, whilst the RSI indicator corrects overbought readings, heading lower around 65, supporting a short term corrective movement, but far from suggesting a stronger bearish move. Should the price accelerate beyond 125.00, the logical target comes at 125.85, the year high posted last June.
Meanwhile, the GBP/USD pair recovered from a daily low set at 1.5525, with the Pound recovering ground, despite the UK service sector resulted worse-than-expected. The Markit Services PMI fell to 57.4 in July from 58.5 in June, although the most disturbing reading was the employment sub-component showing that hiring hit a 16-month low, which may result in a more conservative decision from the BOE this Thursday.
The Central Bank will not only have its monthly economic policy meeting, but will also release the Minutes of the meeting right afterwards. Given the latest comments from some MPC members suggesting the time for a rate hike is getting closer, market expectations are of a change in the vote, which may boost the pair beyond the 1.5700 level.
In the meantime, the 1 hour chart shows that the price is holding above a bullish 20 SMA, whilst the technical indicators are losing their upward strength near overbought territory.
In the 4 hours chart, the pair is now above a horizontal 20 SMA, whilst the Momentum indicator is crossing its mid-line towards the upside, showing no actual strength at the time being, but enough to keep the downside limited around the strong static support placed at 1.5560.