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
More View more
Real Time News
  • Heads Up:🇲🇽 Unemployment Rate (AUG) due at 11:00 GMT (15min) Expected: 4.4% Previous: 4.4% https://www.dailyfx.com/economic-calendar#2021-09-28
  • Heads Up:🇧🇷 BCB Copom Meeting Minutes due at 11:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-28
  • The non-farm payroll (NFP) figure is a key economic indicator for the United States economy. It is also referred to as the monthly market mover. Find out why it has been given this nickname here: https://t.co/yOUVEEqhc5 https://t.co/VWpQJflwqb
  • USD approaching YTD high (93.73) Factors supporting USD - Yields picking up - Risk appetite weaker - Corporate month end, typically USD positive https://t.co/MOjs8VqRav
  • China State Grid says will strictly control power consumption by high-energy consuming polluting sectors - Will closely monitor supply of thermal coal, hydro and wind power
  • Citi lowers China 2022 GDP forecast 4.9% from 5.5%, citing expected spillover from managed Evergrande restructuring
  • Knowing how to accurately value a stock enables traders to identify and take advantage of opportunities in the stock market. Find out the difference between a stock's market and intrinsic value, and the importance of the two here: https://t.co/QszmdZFxlk https://t.co/8p6STxmVC6
  • Spooz sub 50-DMA again. There’s been some selling overnight during the European sessions yesterday and today. Sure hope this doesn’t shape up into a H&S topping pattern, but has anyone else noticed lower highs and lower lows forming? 👀 $SPX $ES #SP500 https://t.co/Bf3Icn2T2H https://t.co/vf8jgtVstk
  • PBoC Governor - PBoC has the conditions in place to maintain a normal and rising yield curve - Sees no need to purchase assets now
  • Not today I’m afraid. I’m on holiday in Ventnor in the lovely Isle of Wight https://t.co/iIm6hBksLs
Bullish USD/JPY Sequence at Risk Amid Failure to Test Monthly-High

Bullish USD/JPY Sequence at Risk Amid Failure to Test Monthly-High

David Song, Strategist

Japanese Yen Talking Points

USD/JPY manages to carves a series of higher highs & lows ahead of the Federal Open Market Committee (FOMC) meeting, with the recent rebound boosting retail interest, but the lack of momentum to test the monthly-high (112.14) may lead to range-bound conditions as the Relative Strength Index (RSI) continues to threaten the bullish formation from earlier this year.

Image of daily change for major currencies

Bullish USD/JPY Sequence at Risk Amid Failure to Test Monthly-High

Image of daily change for usdjpy rate

The U. of Michigan Confidence survey has done little to alter the near-term outlook for USD/JPY even though the index climbs to 97.8 from 93.8 in February as attention turns to the Federal Reserve interest rate decision, with the central bank slated to update the Summary of Economic Projections (SEP).

Even though the FOMC is widely expected to keep the benchmark interest rate in its current threshold of 2.25% to 2.50%, the central bank may continue to alter the forward-guidance for monetary policy ‘in light of global economic and financial developments and muted inflation pressures.’

Image of fed balance sheet

Recent comments from Fed officials suggest the central bank is on track to abandon the hiking-cycle as officials warn ‘that some risks to the downside had increased, including the possibilities of a sharper-than-expected slowdown in global economic growth, particularly in China and Europe,’ and it remains to be seen if Chairman Jerome Powell & Co. will adjust the longer-run interest rate forecast amid budding fears of a policy error.

With that said, the FOMC may also reveal plans to wind down the $50/month in quantitative tightening (QT) as mixed data prints coming out of the U.S. economy stoke fears of a looming recession, and the Fed rate decision may shake up the recent shift in market participation as retail sentiment recovers from an extreme reading.

Image of IG client sentiment for usdjpy rate

The IG Client Sentiment Report shows 47.4% of traders are net-long USD/JPY, with the ratio of traders short to long at 1.11 to 1. In fact, traders have remained net-short since February 27 when USD/JPY traded near 110.60, with the ratio slipping to an extreme reading earlier this month. The IG Client Sentiment index has recovered ahead of the FOMC meeting, with the number of traders net-long 1.7% lower than yesterday and 10.0% higher from last week, while the number of traders net-short is 3.3% lower than yesterday and 7.4% higher from last week.

A flip in the IG Client Sentiment index driven by a further pickup in net-long interest may warn of a broader shift in USD/JPY behavior, with the exchange rate at risk of threatening upward trending channel from earlier this year especially as the Relative Strength Index (RSI) highlights a similar dynamic. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/JPY Daily Chart

Image of usdjpy daily chart
  • Keep in mind, the near-term outlook for USD/JPY remains constructive as both price and the RSI continue to track the upward trends from earlier this year, but the correction following the currency market flash-crash appears to be sputtering amid the lack of momentum to test the Fibonacci overlap around 112.40 (61.8% retracement) to 113.00 (38.2% expansion).
  • In turn, failure to hold above the 111.10 (61.8% expansion) to 111.80 (23.6% expansion) region raises the risk for a move back towards 109.40 (50% retracement) to 110.00 (78.6% expansion), which largely lines up with the 50-Day SMA (110.15).
  • Next downside region of interest comes in around 108.30 (61.8% retracement) to 108.40 (100% expansion), but failure to extend the series of lower highs & lows from the previous week may generate range-bound conditions over the coming days.

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