Risk on sees safe havens abandoned, Japanese Yen retreats (USDJPY forecast)

  • Global financial markets have been in a very volatile environment over the past 1-2 weeks since the outbreak of the coronavirus.
  • Although the virus continues to spread and the death toll increase, with no significant escalation in the spread of the virus, markets have shifted into “risk on” mode over the past two days.
  • In addition, the US earnings season continues to provide broadly positive signals for the state of the US corporate market, which has assisted in a surge back higher in US and in turn global stock indices.
  • In the Forex space, the move back towards “risk on” mode has seen the commodity currencies, the Australian and New Zealand Dollars, attempt to rebound, whilst the safe haven Japanese Yen has retreated.
  • Here we look at the further upside risks for USDJPY.

USDJPY day trade outlook: Upside risks

A surge Tuesday through various resistances as high as 109.27, to also reverse the down trend line from latter January, to reject immediate negative pressures from last week’s plunge through the key 108.58 level, flipping the threat higher into Wednesday.

  • We see a upside bias for 109.60/69; a break above aims for 110.00 and maybe the cycle high at 110.29.
  • But below 109.27 targets 108.85; through here opens risk down towards 108.60.

USDJPY intermediate-term outlook

A late January push below key 108.58 signalled an intermediate-term neutral, range theme, seen as 107.63 to 110.29.

Upside threat: Above 110.29 would set an intermediate-term bull trend for 110.67 and 112.40.

Downside threat: Below 107.63 signals an intermediate-term bear trend for 106.47 and 105.69, maybe 104.40.

4 Hour USDJPY Chart

USDJPY chart

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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