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
  • 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
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/t9FlspUVZz https://t.co/FFMy5O9YoY
  • It’s important for traders to be familiar with FX spreads as they are the primary cost of trading currencies. Understand a pair's spread here: https://t.co/zEEUHZBx7g https://t.co/jZHcyAZ5SU
  • Further your forex knowledge and gain insights from our expert analysts on EUR with our free guide, available today: https://t.co/XtydfV5wS6 https://t.co/Iw9haaHAnn
  • The Federal Reserve System (the Fed) was founded in 1913 by the United States Congress. The Fed’s actions and policies have a major impact on currency value, affecting many trades involving the US Dollar. Learn more about the Fed here: https://t.co/ADSC4sr63f https://t.co/raO3gCGqQ6
USD/JPY Technical Analysis: Yen Drops Most In Year on BoJ Negative Rates (Levels)

USD/JPY Technical Analysis: Yen Drops Most In Year on BoJ Negative Rates (Levels)

Tyler Yell, CMT, Currency Strategist

Sign Up for a Free Yen Trading Guides Here

Talking Points:

  • USD/JPY Technical Strategy: BoJ Delivers Negative Rates, Upside Favored
  • USD/JPY Broke Through 2016 Opening Range High of 120.50
  • JPY Clearly Weakest Currency Now That BoJ Forces It Lower

Aren’t borrowers supposed to compensate lenders by using cash today? Not in today’s world as made evidence by another central bank pushing interest rates below zero. This morning, the Bank of Japan announced that they would adopt adopts a negative interest rate strategy, causing the JPY to drop across the board by the most in a year.

We recently noted that the JPY had been strengthening against G10 currencies and that unless the BoJ forced the market, the strength would continue. They seemed to agree that the JPY needed to be adjusted lower by their monetary policy, and a weaker JPY appears now to be the path of least resistance. This surprising move comes nearly a month after BOJ's Kuroda said the BoJ had no plan to adopt negative rates now, given the success the Federal Reserve had seen in stimulating the economy without resorting to negative rates.

What now appears clear is that the US Dollar is set to take over as a leading G10 currency, which will likely put further strain on the global economy. While this effect is not as clear in how it will play out, further deflation is what central banks have continued to fight unsuccessfully, and the Bank of Japan seems to show by actions that they have more to fight.

Another Behavior Change in USDJPY As Upside Is Forced

USD/JPY Technical Analysis: Yen Drops Most In Year on BoJ Negative Rates (Levels)

The chart above shows an effective price channel that is drawn off key pivots in mid-2015 that have done a fair job of framing price action. We recently pushed off the lower bound of the channel, and it is fair to say that we are now making a move to the channel top near 122.50, and we appear to be doing so in a hurry.

The Bank of Japan announcing negative interest rates for the first time in their history appears to erase the downside probability for now. Given the strength of the US Dollar and the preference of US Dollars in a negative rate world, attention is now toward new highs beyond the 2015 high of 125.85. This view will remain in focus as long as the Fed keeps a focus on higher interest rates, and a weaker Yen continues to be forced by the Bank of Japan. Trends should not be fought, and the 4-year trend higher in USD/JPY looks ready to resume higher.

T.Y.

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

DISCLOSURES