We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Bullish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Bearish
More View more
USDJPY Faces Growing Risk for Lower Low on Risk Aversion, BoJ Policy

USDJPY Faces Growing Risk for Lower Low on Risk Aversion, BoJ Policy

2014-03-11 18:05:00
David Song, Strategist
Share:

Talking Points:

- USDOLLAR at Risk for Range-Bound Prices Ahead of Fed Meeting

- Japanese Yen Benefits from Risk Aversion, Less-Dovish Bank of Japan (BoJ)

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

10574.39

10577.97

10559.15

0.09

53.19%

USDOLLAR Daily

Forex_USDJPY_Faces_Growing_Risk_for_Lower_Low_on_Risk_Aversion_BoJ_Policy_body_Picture_3.png, USDJPY Faces Growing Risk for Lower Low on Risk Aversion, BoJ Policy

Chart - Created Using FXCM Marketscope 2.0

  • Break of Bearish RSI Momentum Raises Risk for Range-Bounce Prices
  • Interim Resistance: 10,602 (38.2 retracement) to 10,615 (78.6 expansion)
  • Interim Support: 10,470 Pivot

Release

GMT

Expected

Actual

NFIB Small Business Optimism (FEB)

11:30

93.8

91.4

Wholesale Inventories (JAN)

14:00

0.4%

0.6%

Wholesale Trade Sales (MoM) (JAN)

14:00

0.2%

-1.9%

The Dow Jones-FXCM U.S. Dollar Index (Ticker: USDollar) may face range-bound prices ahead of Federal Open Market Committee (FOMC) meeting on March 19 as the Relative Strength Index breaks out of the bearish momentum carried over from earlier this year.

Despite expectations of seeing another $10B reduction in the asset-purchase program, the technical outlook continues to highlight a bearish forecast for the USDOLLAR as it remains largely capped by former support (10,615). With that said, the greenback may continue to track sideways over the remainder of the week as market participants weigh the prospects of seeing the first rate hike in the U.S.

Nevertheless, a further deterioration in interest rate expectations may continue to spur lower highs and lower lows as the Fed sticks to its zero-interest rate policy (ZIRP), and the greenback may face additional headwinds over the near-term should the data coming out of the world’s largest economy raise the central bank’s scope to retain the highly accommodative policy stance for an extended period of time.

Join DailyFX on Demand to Cover Current U.S. Dollar Trade Setups

Forex_USDJPY_Faces_Growing_Risk_for_Lower_Low_on_Risk_Aversion_BoJ_Policy_body_ScreenShot197.png, USDJPY Faces Growing Risk for Lower Low on Risk Aversion, BoJ Policy

USDJPY Daily

Forex_USDJPY_Faces_Growing_Risk_for_Lower_Low_on_Risk_Aversion_BoJ_Policy_body_Picture_1.png, USDJPY Faces Growing Risk for Lower Low on Risk Aversion, BoJ Policy
  • Remains Capped by Former Support; Lower High in Place?
  • Interim Resistance: 103.30 (23.6 retracement) to 103.50 (100.0 expansion)
  • Interim Support: 100.50 (61.8 expansion) to 100.70 (61.8 expansion)

The greenback advanced against three of the four components, led by a 0.34 percent decline in the Australian dollar, while the Japanese Yen bucked the trend as market participants scaled back their appetite for risk.

Indeed, the USDJPY appears to be carving a lower high around the 103.50 region as it struggles to close above the 23.6 percent Fibonacci retracement around 103.30, and the low-yielding currency may strengthen further over the near-term as the Bank of Japan (BoJ) scales back its dovish tone for monetary policy.

It seems as though the BoJ may halt its easing cycle sooner rather than later as Governor Haruhiko Kuroda sees scope to achieve the 2 percent target for inflation as early as the end of FY 2014, and a further shift in the policy outlook may ultimately generate a larger decline in the USDJPY as market participants scale back bets of seeing a further expansion in the asset-purchase program.

--- Written by David Song, Currency Analyst

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

To be added to David's e-mail distribution list, please follow this link.

Trade Alongsidethe DailyFX Team on DailyFX on Demand

Looking to use the DailyFX Trade Signals LIVE? Check out Mirror Trader.

New to FX? Watch this Video

Join us to discuss the outlook for the major currencies on the DailyFXForums

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.