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
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
  • 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/v6RGICQvge
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/rws9LHJV3E
  • RT @FxWestwater: Japanese Yen Forecast: JPY Crosses Eye BoJ, CPI as Haven Flows Bolster Yen Strength Link: https://www.dailyfx.com/forex/fundamental/forecast/weekly/jpy/2021/09/18/Japanese-Yen-Forecast-JPY-Crosses-Eye-BoJ-CPI-as-Haven-Flows-Bolster-Yen-Strength.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Westwater&utm_campaign=twr https:/…
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/FVisZuTP6M
  • Stocks appear to be in a corrective phase but could get put to the test; levels and lines to watch in the days ahead. Get your weekly equities forecast from @PaulRobinsonFX here: https://t.co/H1BaTlIHjY https://t.co/zP3mjfslSD
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/Of1thU4zXw
  • Further your forex knowledge and gain insights from our expert analysts on AUD with our free guide, available today: https://t.co/p2FhEwym1E https://t.co/MjiYB85TSF
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/fIO9TP7D62
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/Xja8DHUqlH
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/9po5Lg4vnR
USD/JPY Rate Forecast: Has The Silent BoJ Taper Begun?

USD/JPY Rate Forecast: Has The Silent BoJ Taper Begun?

Tyler Yell, CMT, Currency Strategist

USD/JPY Rate Forecast Talking Points:

Traders around the world on Tuesday woke up to a surprise BoJ development that may seem small on absolute terms, but could lead to a broader shift in their Quantitative & Qualitative Easing Program (QQE.)

The Japanese Yen, which has been the last currency whose central bank in the G4 is limiting discussions on when they will remove their easing program to support the economy notified markets that they were reducing their purchases of super-long bonds, which caused rate prices to drop and yields to jump. This may be a far cry from a taper announcement, but given that the bond bull market has been supported by fewer central bank buyers, another central bank pulling back could be cause for natural concern.

JPY Strengthens Across the Board on Surprise BoJ Announcement

The Bank of Japan’s surprise statement that they will not buy as many long-end bonds as they had been caused investors to be cautious on US notes too. The action sent the US 10Yr note (IG CFD: US 10-Year T-Note) yield to a nine-month high at 2.53% as the inversely related price fell to a nine-month low.

A subsequent move higher to beyond 2.63% would be the highest US10Yr note yield since 2014. Such a move has historically led to a higher USD/JPY, but the Bank of Japan Announcement seems to hold the focus of JPY traders. This week, markets have also seen the US Bond Markets inflation gauge reach 10-month highs that could additionally scare bond buyers.

Correlated Markets Losing Sway With USD/JPY

While the USD/JPY rate has traded sideways for much of the last trading year, the price seems to be dislocating from a lot of correlated markets. Over the last year, the Japan Nikkei (IG CFD: JAPAN225) is up 23%, and the price of Gold (IG CFD: Gold) is up nearly 16%. Meanwhile, USD/JPY is down less than 5%.

The rise in JPY (drop in USD/JPY) aligns with the rise in Gold. However, the rise in the Nikkei typically leads to a jump in USD/JPY, but that has not been playing out recently. The inability for USD/JPY to rise as correlated markets like the Nikkei suggest it should mean that pressure could remain on further upside making the downside more the more probable.

Unlock our Q1 forecast to learn what will drive trends for the Japanese Yen and the US Dollar at the start of 2018!

Traders looking to the charts can short-cut the analysis by keeping a focus on the main support and resistance points. Resistance can be found at 113.40. A break and close above 113.40 with the correlated backdrop would favor further upside to 114.73, the high traded up to in early November.

Key support can be found at 112. A breakdown and close below 112 would open up a likely test to 110.85, the November low after the market retraced fro m114.73. A break below 110.85 would materially change the tone of the bullish view that has occupied the narrative so far in 2018.

Please add a description for the image.

Chart created by Tyler Yell, CMT. Tweet @ForexYell for comments, questions

USD/JPY Insight from IG UK Client Positioning

Please add a description for the image.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDJPY prices may continue to fall. Traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDJPY price trend may soon reverse higher despite the fact traders remain net-long.

---

Written by Tyler Yell, CMT, Currency Analyst & Trading Instructor for DailyFX.com

To receive Tyler's analysis directly via email, please SIGN UP HERE

Contact and discuss markets with Tyler on Twitter: @ForexYell

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

DISCLOSURES