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U.S. Equities continue to get hit, Dow Jones now down more than 1,000 points

USD Eyes Lower Low Amid RSI Divergence- JPY to Benefit From BoJ

USD Eyes Lower Low Amid RSI Divergence- JPY to Benefit From BoJ

David Song, Strategist

Talking Points:

- USDOLLAR Fails to Maintain Range- Carves Lower High Ahead of Fed Meeting

- Japanese Yen Outperforms Against Peers as Market Sentiment Falters





Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index







Forex_USD_Eyes_Lower_Low_Amid_RSI_Divergence-_JPY_to_Benefit_From_BoJ_body_Picture_3.png, USD Eyes Lower Low Amid RSI Divergence- JPY to Benefit From BoJ

Chart - Created Using FXCM Marketscope 2.0

  • Failure to Retain Range Highlights Lower High; Lower Low on Horizon?
  • Bearish Relative Strength Index in Focus
  • Interim Resistance: 10,658 (61.8 extension)- Former Support
  • Interim Support: 10,470 Pivot- Closing Basis





NFIB Small Business Optimism (NOV)




U.S. Financial Regulators Meet on Volcker Rule


Wholesale Inventories (MoM) (OCT)



Wholesale Trade Sales (MoM) (OCT)



The near-term outlook for the Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) is turning increasingly bearish as it fails to hold the range-bound price action carried over from the previous month.

It seems as though the greenback has carved a lower high in December amid the divergence in the Relative Strength Index, and the reserve currency may continue to give back the rebound back in October as it looks poised to mark a lower low over the near-term.

With the FOMC’s December 17-18 meeting coming into focus, the recent price action suggests market participants are scaling back bets of seeing the central bank reduce its asset-purchase program, but the greenback may face additional headwinds prior to the rate decision as Congress struggles to reach a budget deal. In turn, the uncertainties surrounding the monetary/fiscal outlook may continue to dampen the appeal of the greenback, and the dollar may press to fresh lows in the coming days as the rebound from 10,354 appears to have been a mere correction.

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Forex_USD_Eyes_Lower_Low_Amid_RSI_Divergence-_JPY_to_Benefit_From_BoJ_body_ScreenShot091.png, USD Eyes Lower Low Amid RSI Divergence- JPY to Benefit From BoJ


Forex_USD_Eyes_Lower_Low_Amid_RSI_Divergence-_JPY_to_Benefit_From_BoJ_body_Picture_1.png, USD Eyes Lower Low Amid RSI Divergence- JPY to Benefit From BoJ
  • Carves Higher High at 103.38; Correction on Tap?
  • Break of Bullish Relative Strength Index Momentum Favors Downside Targets
  • Interim Resistance: 103.50-60 (100.0 expansion)
  • Interim Support: 100.50 (61.8 expansion) to 100.70 (61.8 expansion)

The greenback weakened across the board, led by a 0.48 percent rally in the Japanese Yen, and the low-yielding currency may continue to appreciate over the next 24-hours of trading as market sentiment falters.

From a technical standpoint, the USDJPY looks poised for a near-term correction as it carves a higher high just below the 100.0 percent Fibonacci expansion around 103.50-60, and we will wait for a downside break in the RSI as it maintains the bullish trend from back in October.

Despite speculation for a December taper, it seems as though the Bank of Japan (BoJ) will stick to the sidelines until Prime Minister Shinzo Abe unveils the ‘Third Arrow stimulus package, and the Yen may benefit from the policy outlook as central bank Governor Haruhiko Kuroda maintains his pledge to achieve the 2 percent target for inflation by 2015.

--- Written by David Song, Currency Analyst

To contact David, e-mail Follow me on Twitter at @DavidJSong.

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