US Dollar positive with risk on theme aiming USDJPY higher

Intermediate
  • The US Dollar has rallied recently as US Treasury Bonds have continued to slide lower in price (to higher yields), with these safe haven assets losing their appeal as global financial markets stay within the current “risk on” environment.
  • This lower yield move has encouraged a strengthening of the US Dollar, with the US currency rallying against safe haven currencies, like the Japanese Yen and Swiss Franc (but also against the Euro and Pound, and even against risk currencies, like the Australian and New Zealand Dollars).
  • The Wednesday data spotlight will be on European Services PMI, alongside Fed speakers Evans and Williams later in the day.
  • These speakers could impact on the USDJPY Forex rate.

USDJPY: Bull threat, aiming higher

A surge higher Tuesday as expected through 108.63 and 109.00/02 resistances, to build on Monday’s strong recovery, fully revering bear activity since the latter October Shooting Star candlestick failure after the Fed Meeting (from just below our key 109.32 resistance, from 109.29), to keep the bias higher Wednesday.

A mid-October surge through the key 108.45/48 peaks signalled an intermediate-term bullish shift, BUT with risks now for an intermediate-term shift to neutral below 107.33

For Today:

  • We see an upside bias through key 109.29/32; break here aims for 109.60/62, maybe 109.93
  • But below 108.79 opens risk down to 108.48.

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

  • Higher targets would be 110.00, 110.67 and 112.04.
  • What Changes This? Below 107.33 shifts the intermediate-term outlook back to neutral; through 106.47 is needed for an intermediate-term bear theme.

4 Hour 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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