Risk off scenario sees the Japanese Yen rally (sets USDJPY lower)

Intermediate
  • A broader risk off scenario has taken hold this week, with global stock averages signalling short-term topping patterns.
  • This has been a reaction to various factors including trade war concerns, Middle East tensions and more recently the heightened impeachment threat to US President Trump.
  • This has produced a “flight to quality” across asset classes with Bond markets higher and in the Forex space has seen a rally in the Japanese Yen.
  • Here we focus on that Japanese Yen rally, highlighting downside risks for USDJPY.

USDJPY: Risks stay lower

A Tuesday plunge after a rebound failure exactly from our 107.80 resistance, to surrender 107.28 and 107.17 supports and reinforce losses since Friday’s plunge below 107.75, to keep risks lower for Wednesday.

The mid-September push above 107.58 set an intermediate-term bull trend.

For Today:

  • We see a downside bias for 107.15; break here quickly aims for 106.93/91, maybe 106.57.
  • But above 107.43 aims for 107.80.

Intermediate-term Outlook – Upside Risks: We see an upside risk for 109.32.

  • Higher targets would be 109.93/110.00 and 112.40.
  • What Changes This? Below 105.69 shifts the intermediate-term outlook straight back to an intermediate-term bear theme.

4 Hour USDJPY Chart

usdjpy

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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