The Japanese Yen bounced back on Thursday and is the best performing currency against the greenback, and the low-yielding currency may continue to appreciate going into the Asian trade as investors scale back their appetite for risk. The USD/JPY remains nearly 200pips lower on the day after moving a massive 234% of its daily ATR, but the lack of momentum to cross below the 88.50 level could lead to a corrective rebound as the 30-minte RSI falls deep into oversold territory. As a result, we may see the dollar-yen maintain the broad range carried over from the previous month, but as risk trends continue to dictate price action in the currency market, another leg lower could lead the pair to test the December low at 87.36.
The New Zealand dollar took the biggest tumble amongst the majors and slipped below the 200-Day SMA (0.6858) to reach a fresh yearly low of 0.6845. The NZD/USD extended the decline from the previous day and remains 160pips lower from Wednesday close at 0.7029 after moving 185% of its average true range, but we may see a corrective retracement going into Friday’s session as the pair remains heavily oversold. As the economic docket remains fairly light for the overnight trade, risk trends are likely to drive price action throughout the Asian session, but the U.S. non-farm payrolls report due out tomorrow at 13:30 GMT is likely to stoke increased volatility across the currency market as investors weigh the outlook for global growth.
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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com
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