- 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.
- 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