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
GBP/USD
Bearish
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
  • The USD could still rally a bit from here, but has resistance not far ahead that it will need to overcome if it is to extend to a larger degree. Get your weekly $USD technical forecast from @PaulRobinsonFX here: https://t.co/n0CVWWOJDe https://t.co/0uLjsQ2gwM
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/nfiFAlyYXv
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0unrdT https://t.co/mIsVJ4zTbB
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/hymrumanUY
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfs2Iz https://t.co/6dAqxsVfxJ
  • The results of this weekend’s German Federal Election will likely dominate Euro sentiment at the start of the week ahead but after a possible EUR/USD bounce they will have little long-term impact. Get your weekly $EUR forecast from @MartinSEssex here: https://t.co/Xu3ZT7EtrW https://t.co/5VHKn52MaA
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here: https://t.co/nAa0fHq4Np https://t.co/mf9rsmIvaW
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/mYWO0Eta0P
  • Sterling continues to contract into trend extremes and the focus is on a pending breakout in the weeks ahead. Get your weekly $GBP technical forecast from @MBForex here: https://t.co/ZvEMQuFjSs https://t.co/rMmq9cehnY
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/tm4k3IVzHr
USD/JPY Eyes July Low with US Yields Under Pressure Ahead of NFP Report

USD/JPY Eyes July Low with US Yields Under Pressure Ahead of NFP Report

David Song, Strategist

Japanese Yen Talking Points

USD/JPY appears to be on track to test the July low (109.06) following the Federal Reserve interest rate decision as longer-dated US Treasury yields come back under pressure.

Advertisement

USD/JPY Eyes July Low with US Yields Under Pressure Ahead of NFP Report

USD/JPY extends the series of lower highs and lows from the previous week as the US ISM Manufacturing survey unexpectedly downticks in July, and the exchange rate may face a further decline over the coming days as the 10-Year Treasury yield approaches the July low (1.13%).

The update to the US Manufacturing survey may keep the Federal Open Market Committee (FOMC) on the sideline as the index narrows to 59.5 from 60.6 in June to mark the lowest reading since the start of the year, and indications of a weaker-than-expected recovery may continue to drag on US yields as it encourages the Fed to retain the current course for monetary policy.

Image of DailyFX Economic Calendar for US

As a result, the slew of US event risks may influence USD/JPY ahead of the Non-Farm Payrolls (NFP) report as a number of Fed officials are scheduled to speak over the coming days, and more of the same from the central bank may keep US yields under pressure as Governor Lael Brainard, a permanent voting-member on the Federal Open Market Committee (FOMC), insists that “employment has some distance to go” while speaking at the Annual Meeting of the Aspen Economic Strategy Group.

In turn, lackluster data prints coming out of the US economy may drag on USD/JPY as the FOMC remains reluctant to switch gears, but a further decline in the exchange rate may fuel the recent shift in retail sentiment like the behavior seen earlier this year.

Image of IG Client Sentiment for USD/JPY rate

The IG Client Sentiment report shows 50.75% of traders are currently net-long USD/JPY, with the ratio of traders long to short standing at 1.03 to 1.

The number of traders net-long is 6.48% higher than yesterday and 16.67% higher from last week, while the number of traders net-short is 7.36% higher than yesterday and 12.28% lower from last week. The rise in net-long interest has fueled the shift in retail sentiment as 45.73% of traders were net-long USD/JPY last week, while the decline in net-short position could be a function of profit-taking behavior as the exchange rate extends the series of lower highs and lows from last week.

With that said, a further decline in USD/JPY may fuel the shift in retail sentiment like the behavior seen earlier this year, and the exchange rate appears to be on track to test the July low (109.06) as US yields come under pressure.

USD/JPY Rate Daily Chart

Image of USD/JPY rate daily chart

Source: Trading View

  • USD/JPY approached pre-pandemic levels as a ‘golden cross’ materialized in March, with a bull flag formation unfolding during the same period as the exchange rate traded to a fresh yearly high (110.97).
  • The Relative Strength Index (RSI) showed a similar dynamic as the indicator climbed above 70 for the first time since February 2020, but the pullback from overbought territory has undermined the upward trend from this year, which briefly pushed USD/JPY below the 50-Day SMA (110.07) for the first time since January.
  • Nevertheless, USD/JPY reversed ahead of the March low (106.37) to largely negate the threat of a head-and shoulders formation, with the exchange rate climbing back above the moving average to trade to a fresh yearly high (111.12) in June.
  • A similar scenario took shape in July as USD/JPY traded to a fresh yearly high (111.66), but lack of momentum to hold above the 109.40 (50% retracement) to 110.00 (78.6% expansion) region may push the exchange rate towards the Fibonacci overlap around 108.00 (23.6% expansion) to 108.40 (100% expansion), with the next area of interest coming in around 107.20 (61.8% retracement).

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

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

DISCLOSURES