Tariff and Trade Fears keep the Yen strong, USDJPY aims lower

Intermediate
  • In our reports here and here this week we have highlighted a shift to a “risk off” environment across global financial markets, starting on Monday after President Trump’s tweets regarding US tariffs on Chinese goods to be imposed this Friday.
  • Fears continue to grow that this will have a significantly negative impact on the current US-Sino trade talks resuming this week.
  • Equity markets have headed South and sent topping signals as highlighted in the prior articles, “risk” currencies (like the Australian and New Zealand Dollar) have suffered notable losses, whilst the safe haven Japanese Yen has seen a strong advance.
  • Here we spotlight the firm rally for the Japanese currency, focusing on the weakness in the USDJPY Forex rate.

USDJPY downside threat for a bear shift below 109.69/66 supports

A push still lower Wednesday through 110.27 support, to reinforce Tuesday’s rebound failure and Monday’s bear gap (at 110.95-111.04) to push below key 110.81 support, leaving the bias lower for Thursday.

The early May push below 110.81 set an intermediate-term range, seen as 109.66 to 112.40, BUT with risk growing for an intermediate-term bearish shift below 109.66.

For Today:

  • We see a downside bias for 109.82; break here quickly aims for key 109.69/66, then 109.43, maybe even 109.12.
  • But above 110.67/73 aims for the resistance gap at 110.95-111.04.

Intermediate-term Range Breakout Parameters: Range seen as 109.66 to 112.40.

  • Upside Risks: Above 112.40 sets a bull trend to aim for 113.71, 114.55 and 115.00.
  • Downside Risks: Below 109.66 sees a bear trend to target 108.47, 107.74 and 106.72/55.

4 Hour USDJPY Chart

usdjpy

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