USDJPY Breaking To Higher Ground

  • Dollar bulls are in full cry, there are positive background noises
  • The strength of the Dollar will continue, even if the Fed are on hold
  • There is no economic outperformance from Japan
  • Target USDJPY rising to 114.55

USDJPY broke above the 112 level this past Friday and in so doing printed a month high at 112.10. Should we be reading this as a signal that risk appetite across the market is improving?

To add some credence to such a view one should note that although equities retreated as the week began, they staged a rebound on Friday. In so doing they were not so far from 6-month highs.

There are reasons to be cautious as talk of an economic slowdown is still doing the rounds There’s been a lot of talk about trade tensions between the U.S. and China not being resolved and U.S./EU relations are far from cordial… then of course there is still Brexit to deal with.

However, one must note that many investors are building a sense of growing optimism as JP Morgan’s Q1 earnings beat forecasts which gave a lift to financial stocks even though Wells Fargo missed as it lowered net interest income guidance.

U.S. oil and gas shares were booking solid gains as they were chased higher following a $33 Billion cash and stock bid for Anadarko by Chevron. Walt Disney soared after a most positive investor day that focused on the Disney+ streaming service. It may have to wait a few more years before all its products can be screened exclusively, but the group released a very ambitious 2024 subscriber target.

So, the question to be asked is whether trend has become settled so that USDJPY can make a print of 114 before 110? The 12-month chart shown below reals that spot has broken above the key moving average metrics and all bar one of the technical sentiment measure from one-minute to one-month all read “Strong Buy”. I am looking for the bullish trend that began in January to continue.

USDJPY 12-Months 15-04-19

Source: , Spotlight Ideas

The market may look at the comments from Fed President Bullard who thinks the March rate hike marked the end of policy normalisation and favours removing the word “patient” from the policy statement because it suggests a tightening bias.

However, Japan is hardly in a shape for the Bank of Japan to start cranking up its own rate structure. The Japanese economy advanced 0.5% QoQ in Q4 2018, stronger than the preliminary estimate of a 0.3%; recovering from a downwardly revised 0.6% contraction in Q3.

Japan’s consumer price inflation stood at 0.2 percent year-on-year in February 2019, unchanged from the previous month’s 15-month low and below market expectations of 0.3%.

The Bank of Japan’s Tankan index for big manufacturers’ sentiment fell to a two-year low of 12 in the first quarter 2019 from 19 in the previous three-month period and below market consensus of 14.

I am looking to be long the Dollar versus the Yen with a target of 114.55.

USDJPY Three-Year 15-04-19

Source: , Spotlight Ideas


Buy at opening

Target 1 114.55

Stop at 110.50

Comments on this analysis

Latest News

Elliott Wave Analysis: EURUSD and GBPJPY Are Aiming Higher!

EURUSD is trading in a bullish trend, up from 1.118 level, where a higher degree wave 2 correction had found a base. We labelled a five-wave impulsive movement in progress, with price now trading at the end of a sub-wave v) of one. Once we get five minor legs within the wave v) of one, … Continued

Forex Videos
US Dollar weakness pervades

Dollar Index sell signal and breaks down through support EURUSD upside risk to 1.1497 GBPUSD buy signal from last Wednesday USDJPY at critical support! AUDUSD and NZDUSD buy signals

FedEx one month
FedEx Prospects Depend on a US-China Trade Deal

FedEx will announce results after the close on Tuesday The last dividend offered no increase in payment value The stock is going to suffer if the U.S. and China are engaged in a trade dispute Sustained upside depends on Trump and Xi =making progress at the G20 If one were to look at the picture … Continued

Current Market Analysis
FX Explained Weekly Recap/ Outlook: w/c 24/06/19

Recap A more dovish shift by both the ECB (European Central Bank) and the US Federal Reserve (Fed) last week. On Tuesday ECB President Mario Draghi signalled possible rate cuts this year and other monetary policy accommodation (quantitative easing, QE). Expectation was for a dovish statement from the FOMC at Wednesday’s Meeting, but the market … Continued

Forex Brokers in your location