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USD/JPY Carves Lower-Highs in April; Bearish RSI Momentum in Focus

USD/JPY Carves Lower-Highs in April; Bearish RSI Momentum in Focus

David Song, Strategist

Talking Points:

- USD/JPY Retail Crowd Remains Net-Long Despite String of Lower Highs.

- Long-Term Bearish EUR/USD Outlook Vulnerable to European Central Bank (ECB)‘Taper Tantrum.’

- USDOLLAR Holds February Low (11,736); All Eyes on U.S. Non-Farm Payrolls (NFP).

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USD/JPY

USD/JPY Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • USD/JPY may continue to face a narrowing range in the days ahead as it carves a series of lower-highs in April; downside risk remains as the Relative Strength Index (RSI) retains the bearish momentum from back in December.
  • Seems as though the Bank of Japan (BoJ) will retain its JPY 80Y/month asset-purchase program as Governor Haruhiko Kuroda remains confident in achieving the 2% inflation target over the policy horizon; may put increased emphasis on the fundamental developments coming out of the U.S. economy.
  • Despite waning market participant going into the end of the week/month, DailyFX Speculative Sentiment Index (SSI) shows retail crowd remains heavily long USD/JPY as the ratio stands at +2.25.

EUR/USD

EUR/USD Daily Chart
  • EUR/USD advances for six-consecutive sessions to mark the longest stretch of advance since December 2013; will keep a close eye on the RSI as it flirts with overbought territory.
  • As the European Central Bank (ECB) strikes an upbeat outlook for the euro-area and sees the decline in long-term inflation expectations coming to a halt, may see a growing risk for a ‘taper tantrum’ in the second-half of the year.
  • Series of higher highs & lows may generate a further advance in EUR/USD, with the next key region of interest coming in around the 1.1330 handle (78.6% retracement).

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Read More:

Price & Time: Kiwi Impasse

AUDJPY Breakout Scalps Target 200 DMA Ahead of BoJ, China PMI

USDOLLAR(Ticker: USDollar):

Index

Last

High

Low

Daily Change (%)

Daily Range (% of ATR)

DJ-FXCM Dollar Index

11831.94

11839.2

11758.61

0.45

109.37%

USD/JPY Carves Lower-Highs in April; Bearish RSI Momentum in FocusUSDOLLAR Daily Chart

Chart - Created Using FXCM Marketscope 2.0

  • Despite the mixed batch of fundamental developments over the last 24-hours of trade, the Dow Jones-FXCM U.S. Dollar may hold the February low (11,736) going into May as the RSI fails to push into oversold territory.
  • Will keep a close eye on the employment component for the ISM Manufacturing survey as market participants turn their attention to the Non-Farm Payrolls (NFP) report due out on May 8.
  • May see a larger rebound on the back of month-end flows, but will watch former support zones for new resistance amid the bearish momentum, with the key region of interest coming in around 11,901 (78.6% expansion).

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Release

GMT

Expected

Actual

Fed’s Daniel Tarullo Speaks on U.S. Economy

12:30

Personal Income (MAR)

12:30

0.2%

0.0%

Personal Spending (MAR)

12:30

0.5%

0.4%

Personal Spending ex Inflation (MAR)

12:30

0.3%

0.3%

Personal Consumption Expenditure Deflator (MoM) (MAR)

12:30

0.2%

0.2%

Personal Consumption Expenditure Deflator (YoY) (MAR)

12:30

0.4%

0.3%

Personal Consumption Expenditure Core (MoM) (MAR)

12:30

0.2%

0.1%

Personal Consumption Expenditure Core (YoY) (MAR)

12:30

1.4%

1.3%

Initial Jobless Claims (APR 25)

12:30

290K

262K

Continuing Claims (APR 18)

12:30

2300K

2253K

ISM Milwaukee (APR)

13:00

53.00

48.08

Chicago Purchasing Manager Index (APR)

13:45

50.0

52.3

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--- 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.

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