Nikkei 225 index retreats as more Japan stocks sold

The US dollar rose against key currencies after the Fed published the latest minutes of the previous meeting. Fed officials said they were not ready to reduce the $120 billion monthly asset purchases. The minutes show members will likely intensify talks on ending these purchases in a meeting scheduled for later this month. The members also agreed that the current phase of high inflation was temporary. They also projected that they would raise interest rates from near zero by 2023. The currency will react to the latest initial jobless claims numbers scheduled for later today.

The Japanese yen declined against the US dollar after the latest bank lending by the Bank of Japan (BOJ). The data showed that foreign investors reduced their stakes in Japanese stocks by more than 310 billion yen in June. They cut their holdings by an additional 146 billion yen in the previous month. This probably explains why the Nikkei 225 index has declined slightly recently. Further, foreigners reduced their Japan bond holdings by more than 190 billion yen. Meanwhile, the country’s current account increased from more than 1.32 trillion in May to 1.98 trillion yen. The current account measures the value between exported and imported goods and services.

The economic calendar will have some limited events today. Key ones to watch are the Switzerland unemployment rate that is expected to drop from 3.0% to 2.9%. Germany will publish the latest exports and imports data. The country’s exports will likely be affected by the ongoing chip shortage that has had a negative impact on the automobile industry. The Energy Information Administration (EIA) will publish the latest oil inventories data while Brazil, India, and Mexico will publish the latest inflation data.

USD/JPY

The USDJPY pair declined to a multi-week low of 110.38. On the four-hour chart, the pair has moved between the lower and middle line of the Bollinger Bands. It also declined below the lower line of the ascending channel. The MACD has moved below the neutral level while the Moving Average of the Oscillator has moved above the neutral level. The pair will likely keep falling as bears target the next key support at 110.

JPN225

The Nikkei 225 index declined to a low of ¥28,195 after data showed that foreigners are dumping Japanese stocks. This price is substantially lower than the year-to-date high of almost ¥30,000. On the four-hour chart, the pair has dropped below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has been in a downward trend. It is also along the lower side of the descending channel. Therefore, the index will likely keep falling, with the next level to watch being at ¥28,000.

EUR/USD

The EURUSD pair declined to the lowest level since April after relatively hawkish FOMC minutes. The pair managed to move below the support at 1.1845 and 1.1800. It is trading at 1.1785. It has also moved below the 25-day moving average and the Ichimoku cloud. Therefore, the path of least resistance for the EURUSD pair is to the downside.