“Risk off” scenario leaves Japanese Yen strong (USDJPY forecast)

Intermediate
  • The global “risk off” shift over the past week with growing concerns regarding the spread of the coronavirus was reinforced on Friday by a significant selloff in US and global stocks and by an aggressive move lower again Monday!
  • In the Forex space, this has seen a flight to quality to the Japanese Yen, sending USDJPY lower.
  • Despite small rebound overnight, the threat into month-end remains for further USDJPY weakness.

USDJPY day trade outlook: Risks lower to key 108.58 support 

A Sunday/Monday gap lower (gap subsequently closed) but to push below 108.98 to 108.71, to sustain bear forces from last Thursday’s plunge below 109.39 support to reinforce the topping pattern and keep risks lower for Tuesday.

  • We see a downside bias for 108.71; a break below aims for key 108.58 and maybe 108.24.
  • But above 109.14 targets 109.65/69.

Intermediate-term outlook

A January push above key 109.73 signalled an intermediate-term bull trend.

Upside threat: We see an intermediate-term bull trend for 110.67 and 112.40.

What changes this? Below 108.58 sets an intermediate-term neutral tone and only through 107.63 an intermediate-term bear trend.

 

USDJPY Chart

USDJPY chart

Steve Miley

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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