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USD/JPY Outlook Remains Mired by Bearish Momentum- 120.55 in Focus

USD/JPY Outlook Remains Mired by Bearish Momentum- 120.55 in Focus

David Song, Strategist

Talking Points:

- USD/JPY Climbs to Fresh Weekly High- Japan to Post First Trade Surplus Since 2012.

- GBP/USD Eyes 1.5000 Resistance Ahead of Bank of England (BoE) Minutes.

- USDOLLAR Remains at Risk as Fed Liftoff Remains ‘Uncertain.’

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USD/JPY

USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the failure to retain the monthly opening range, USD/JPY may continue to face range-bound prices as it climbs to a fresh weekly high of 119.82; still waiting for a break of the bearish RSI momentum carried over from December to favor a resumption of the long-term bullish trend.
  • With Japan expected to post its first trade surplus since 2012, a positive development may encourage the Bank of Japan (BoJ) to retain its currently policy at the April 30 policy meeting as Governor Haruhiko Kuroda remains confident in achieving the 2% inflation target over the policy horizon.
  • DailyFX Speculative Sentiment Index (SSI) shows the retail crowd remains net-long USD/JPY since April 8, with the ratio coming off of recent extremes to hold at +2.25.

GBP/USD

GBP/USD Daily Chart
  • Despite the near-term rebound in GBP/USD, the lack of momentum to close above 1.5000-15 (50% expansion) may highlight a near-term topping process in the exchange rate.
  • May get more of the same from the Bank of England (BoE) Minutes as the May 7 election continues to cloud the fiscal outlook for the U.K.; need a growing dissent to have a bullish impact on the sterling.
  • GBP/USD remains at risk for a further decline as the BoE continues to delay its easing cycle, with the next key region of interest coming in around 1.4480 (100% expansion) to 1.4500.

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Read More:

Price & Time: Key Day For the Pound

COT-Mexican Peso Large Speculators Flip to Long Position

USDOLLAR(Ticker: USDollar):

IndexLastHighLowDaily Change (%)Daily Range (% of ATR)
DJ-FXCM Dollar Index11999.8012044.7711994.34-0.0873.26%
USDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Failure to push above former channel support may highlight a further decline in the Dow Jones-FXCM U.S. Dollar as the bearish RSI momentum remains in play; close below 11,951 (38.2% expansion) to 11,952 (50-Day SMA) to provide conviction/confirmation for additional greenback weakness.
  • With market participants starting to turn their attention to the Federal Open Market Committee’s (FOMC) April 29 interest rate decision, the data prints prior to the policy meeting may play an increased role in driving dollar volatility.
  • Lack of momentum to retain the monthly opening range may open up key support standing around 11,869 (23.6% expansion) to 11,901 (78.6% expansion).Join DailyFX on Demand for Real-Time SSI Updates!
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--- Written by David Song, Currency Analyst

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

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