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
EUR/USD
Bearish
Oil - US Crude
Bullish
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
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • And the Monday Asia trading session has officially begun. A pair to have on your watch list to kick off early trade: $AUDUSD post head-and-shoulders' neckline (and 200-DMA) breakdown https://t.co/iuYqEN5xpv
  • The ISM manufacturing index plays an important role in forex trading, with ISM data influencing currency prices globally. Find out about the recent history of ISM data, how to track it, and how to trade its release here: https://t.co/MZtBh88nOv https://t.co/DIP9cgoSUt
  • Here are the top scheduled event risks on my calendar for the coming week. Global PMIs, a few rate decisions, the Fed's bank stress test results, the Fed's favorite inflation indicator and a run of Fed speak among much more: https://t.co/3jIl4PvHiA
  • I know it is a cognitive bias, but it seems that every time I take a day off, there are significant market moves. Dow's tumbled into a 5th straight session Friday with 10-day correlation to Nasdaq most extreme negative in 4 years https://t.co/V3U6IOAEXz
  • *Reminder: Weekly Strategy Webinar tomorrow morning at 8:30am EST (12:30GMT) on DailyFX!! - lots to discuss on the back of last week's #Fed Fireworks! https://t.co/lxd5fZnn4H
  • Technical analysis of charts aims to identify patterns and market trends by utilizing differing forms of technical chart types and other chart functions. Learn about the top three technical analysis tools here: https://t.co/KDjIjLdTSk https://t.co/l0j9vLrMIp
  • Markets Week Ahead: Gold, Dow, Pound-Dollar, BoE Rate Decision, Fed Risk, PMIs Check out my recap of last week and preview of upcoming event risk, plus all the latest forecasts from the @DailyFX team below. Link to Analysis - https://www.dailyfx.com/forex/fundamental/forecast/weekly/title/2021/06/20/Markets-Week-Ahead-Gold-Dow-Pound-Dollar-BoE-Rate-Decision-Fed-Risk-PMIs.html $GLD $DJI $GBPUSD #Trading
  • Traders focus a lot of their energy on spotting the perfect time to enter a trade. While this is important, it is ultimately where traders choose to exit trades that will determine success. Learn about the three types of trading exit strategies here: https://t.co/muYkTNXH7s https://t.co/hbZPJmoOHe
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqhRoMG https://t.co/C0i7u1dDKL
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/Q69HKBXeKH
USD/JPY Technical Analysis: Alignment of Forces Keeps Yen Weak

USD/JPY Technical Analysis: Alignment of Forces Keeps Yen Weak

Tyler Yell, CMT, Currency Strategist

USD/JPY Rate Forecast Talking Points:

  • The ONE Thing: Despite showing overbought on momentum indicators, USD/JPY may continue pushing higher as JPY weakness remains supported on multiple fronts.
  • Seasonal studies show JPY weakness remains the preferred FX play in Q4. Over the last ten years, traders who were short USD/JPY often ended the year with a sour taste in their mouth. More precicely, when inflation concerns arose (as they are now), USD/JPY saw significant jumps in the rate, most notably in 2014 and 2016.
  • Technical Analysis of the Japanese Yen: USD/JPY holds a bullish structure north of 112.37, which is the 21-Day moving average. Lack of haven demand and widespread US Dollar strength and falling haven demand as evidenced by higher yields and higher equities on falling implied volatility that seem also to support a weakening JPY.

KEY TECHNICAL LEVELS FOR JAPANESE YEN RATE TO US DOLLAR:

  • Overall Bias: 11-month high favors pull-back risk, seen as opportunity to add risk
  • Resistance: ¥114.73, November 6 intraday high
  • Spot: ¥114.35 per USD
  • Support: 112.37, 21-Day Moving Average

USD/JPY is trading at 11-month highs with a focus on the November 6 high of 114.73. Since September, the pair has moved in a rather linear fashion, and despite being stretched, traders could see the gains extend.

Traders often know USD/JPY as the pair that fails to give you exactly what you want. Specific to this market, USD/JPY may fail to give traders a fair pull-back to re-enter as conservative risk management would suggest. This often puts traders in the bind of chasing the move, as in FOMO, or letting it play on knowing they’ve missed the move.

Intermarket Support for USD/JPY Seems Too Good to be True

Please add a description for the image.

Data source: Bloomberg, Chart created by Jake Schoenleb

The correlated markets for higher USD/JPY seem to be firing on all cylinders. A critical market that often helps drive JPY-crosses, and USD/JPY is particular is government rates. With the BoJ recently stating they’re pulling away (or intend to) from aggressive asset purchases in the government bond market, the spread between the front and back end of the Japanese Government Bond (JGB) curve seen in blue above is widening.

The widening yield curve in Japan has had a strong influence on the direction of USD/JPY. Similarly, US yields, which tend to be a proxy for inflation concerns hit the highest levels on Wednesday since 2014, which is when USD/JPY was making its way up to 125 Yen per USD.

A Few other supporting markets worth noting are equities, with Japan’s Nikkei recently trading to the highest level since 1991, and moving toward the 61.8% retracement line of the 1989-2008 range of 38,920-6,994 respectively at 26724.8 with Tuesday trading as high as 24,448.

Lastly, cross-currency basis swaps, a little known, but highly influential measure of funding stress in the market is showing that US Dollars are harder to come by, and appear to be lifting the US Dollar as institutions begin their year-end hedging programs. In late September, the 26th to be exact, the demand or premium for US Dollars relative to JPY in currency swaps jumped aggressively beyond the covered interest rate parity price showing to the tune of 58bps in favor of USD.

While causation is not claimed, merely correlation, it is worth noting that the smallest amount of US Dollar premium in at least the last five years per Cross-Currency Basis Swaps came on March 27 when USD/JPY traded at the lowest level since December 2016.

USDJPY Chart: Daily Chart Shows Impulse To Critical 114.5 Zone

Please add a description for the image.

Chart Source: IG UK Price Feed. Created by Tyler Yell, CMT

The chart above is leaning upon the insights provided from Andrew’s Pitchfork. A few analysts of the technical persuasion have learned to love APs at DailyFX as they share with you the ‘road’ that markets are traveling upon, and when a behavior shift has taken place in the market.

The chart above shows a new pitchfork since the key pivots in February and March paved the way for the current impulse higher. The recent move has now taken the price above the pitchfork drawn around key pivots in Q4 2014-Q1 2015.

The shorter-term charts seem to provide insight with a bullish bias set to hold against prior lower-highs of 113.52, 112, and 110.4.

Short-Term Chart Shows Strength Of Move Since Early September

Please add a description for the image.

The recent surge above 114.06 has likely taken the fight out of the bears and given the intermarket support' traders may want to brace for new 2018 extremes to print if we remain above the key support levels. The Fibonacci extension applied above shows a target at 115.38, but that does not mean the move will end there if the support remains.

The bullishness will have proven premature on a break below ‘2’ on the chart at 112.04.

More Support for Your Trading:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q4 have a section for each major currency, and we also offer an excess of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our popular and free IG Client Sentiment Indicator.

---Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler provides Technical analysis that is powered by fundamental factors on key markets as well as trading educational resources. Read more of Tyler’s Technical reports via his bio page.

Communicate with Tyler and have your shout below by posting in the comments area. Feel free to include your market views as well.

Talk markets on twitter @ForexYell

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

DISCLOSURES