News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
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
More View more
Real Time News
  • Feels like the market has been front-running next week’s FOMC announcement, which will reveal updated dot plot projections. Expectations clearly set for a more hawkish shift in guidance. That said, if the Fed does not deliver, US Dollar bulls could be disappointed. $USD $DXY https://t.co/o2v6ibac3L
  • USD/CAD has been chopping around the past week-and-a-half, offering virtually no cues on its next direction. Get your market update from @PaulRobinsonFX here:https://t.co/eq1YkOa3mC https://t.co/V6h8BjyeGa
  • FDA panel votes 16-3 against approving Covid-19 booster shots - BBG
  • RT @C_Barraud: 🇺🇸 Americans Haven’t Been This Down on #Housing Market Since 1982 - Bloomberg *Link: https://t.co/wWFnbAwIDO https://t.co/6G…
  • US Dollar Price Action Setups Pre-FOMC: EUR/USD, GBP/USD, USD/CAD https://www.dailyfx.com/forex/analyst_picks/todays_picks/james_stanley/2021/09/17/US-Dollar-Price-Action-Setups-pre-FOMC-EURUSD-EUR-USD-GBP-USD-GBPUSD-USD-CAD-USDCAD.html https://t.co/J25MYsXCa9
  • The US Dollar is pushing up to a fresh September high after the release of University of Michigan Consumer Sentiment data. Get your $USD market update from @JStanleyFX here:https://t.co/2CDNZh2a89 https://t.co/bULXuCaHKk
  • I have this $SPX chart taking over one of my whole screens, and I just keep staring at that 50-day moving average... https://t.co/R9LQAuL2DL
  • RT @TheStalwart: Nice chart, which shows why countries in green on the perimeter, like Iran, Peru, and Turkey are known for their stability…
  • Selling pressure strengthening in Wall Street two hours before the close. S&P 500 down roughly 1% intraday, the largest decline since August 18th #trading $SPX $SPY
  • One of the strongest correlation with Bitcoin at the moment is the US 10-Year Treasury yield https://t.co/uZBzJ7yiXf
USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

David Song, Strategist

Japanese Yen Talking Points

USD/JPY looks poised for a larger rebound following the currency market flash crash as the exchange rate carves a series of higher highs & lows, while the Relative Strength Index (RSI) bounces back from oversold territory.

USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

USD/JPY may continue to catch a bid ahead of the Federal Open Market Committee (FOMC) Minutes as U.S. President Donald Trump tweets that ‘talks with China are going very well,’ and the mild improvement in risk sentiment may keep the dollar-yen exchange rate afloat as U.S. Treasury yields highlight a similar dynamic.

Efforts to avoid a U.S.-China trade war should continue to shore up investor confidence especially as the People’s Bank of China (PBoC) appears to be on track to reduce the Reserve Requirement Ratio (RRR) ahead of the lunar New Year, and the FOMC Minutes may do little to influence the near-term outlook for USD/JPY as the central bank shows a greater willingness to adopt a wait-and-see approach in 2019.

USD/JPY Rate Risks Larger Flash-Crash Correction on RSI Signal

As a result, Fed Fund Futures may continue to show the FOMC on hold throughout the first-half of the year, but the ongoing adjustment in the Fed’s balance sheet offers a bullish argument for USD/JPY as the Bank of Japan (BoJ) remains in no rush to move away from the Quantitative/Qualitative Easing (QQE) Program with Yield-Curve Control.

With that said, the Fed’s quantitative tightening (QT) may provide USD/JPY with a fundamental floor even though the narrowing balance sheet drags on risk-taking behavior, but the flash crash appears to be shaking up retail interest as traders fade the sharp rebound in the exchange rate.

usdjpy ig client sentiment index

The IG Client Sentiment Report shows 60.2% of traders are now net-long USD/JPY compared to 64.6% last week, with the ratio of traders long to short at 1.51 to 1.The number of traders net-long is 1.8% lower than yesterday and 10.3% lower from last week, while the number of traders net-short is 5.7% lower than yesterday and 23.3% higher from last week.

The ongoing tilt in retail sentiment provides a contrarian view to crowd sentiment even though net-long interest suffers following the USD/JPY flash crash, and current market conditions may foster a more bearish fate for the dollar-yen exchange rate as both price and the Relative Strength Index (RSI) snap the bullish trends from the previous year. However, the jump in net-short position may foreshadow a broader shift in market behavior as traders fade the recent recovery in USD/JPY, and the recent series of higher highs & lows may generate a larger rebound in the exchange rate, with the RSI flashing a textbook buy-signal as it crosses back above 30. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/JPY Daily Chart

usdjpy daily price chart
  • Keep in mind, the broader outlook for USD/JPY remains tilted to the downside, but the exchange rate may stage a larger rebound following the failed attempt to test the 2018-low (104.63), with the recent series of higher highs & lows bringing the Fibonacci overlap around 109.40 (50% retracement) to 110.00 (78.6% expansion) on the radar.
  • Need a close back below the 108.30 (61.8% retracement) to 108.40 (100% expansion) region to bring the downside targets back on the radar, with the first hurdle coming in around 106.70 (38.2% retracement) to 107.20 (61.8% retracement) followed by the 105.40 (50% retracement) area.

For more in-depth analysis, check out the Q1 2019 Forecast for the Japanese Yen

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES