USDJPY Breaking to Lower Levels

Intermediate
  • Dollar bulls are scattered
  • The Dollar is reeling after Trump’s tariff attack on Mexico
  • There is no economic outperformance from Japan, but still Yen rises
  • Target USDJPY down to 107.45

USDJPY posted losses on Friday after two positive sessions to close the month at 108.28 (-1.21%).

USDJPY

Source: www.tradingeconomics.com , Spotlight Ideas

This came amid a widespread risk-off trade throughout the global financial markets as risk sentiment deteriorated after Trump announced tariffs on all goods from Mexico. The price he seeks to not impose these charges is that its southern neighbour curb illegal immigration into the U.S.

This created fresh concerns over the aggressive external policy by the U.S. President and if there is truth in the way, Mexico has promised to retaliate the situation could get even worse down the road. All at a time when there seems little progress in the trade dispute with China or any lowering of tension between the U.S. and Iran.

The chart above shows a Fibonacci extension of the major range in May 2019. The fact that 109.00 was not defended with any conviction underlines the rapid collapse in the pair on Friday. Indeed, all the technical measures from “One Minute” through to “One Month” all read as “Strong Sell”.

Therefore, despite a sense that some market participants may take a contrary view and see being short-term oversold I am looking for USDJPY to fall further, That, will only be ameliorated if 109.00 is regained in quick time.

The Yen has stayed strong despite Japanese data disappointing the market. Tokyo inflation rose by less-than-anticipated in May, up by 1.1% vs. the previous 1.4%, while Retail Trade posted a modest 0.4% advance in April. Housing-related data showed that Construction Orders fell in April a whopping 19.9%, while Housing Starts decreased by 5.9%. Industrial Production was the only figure that showed some improvement, up by 0.6% MoM and down by 1.1% YoY.

The Yen is the notable outperformer in the G10 space as safe-haven flows support and for that reason I am seeking more Yen gains to 107.45.

Summary:

Sell at opening

Target 1 107.45

Stop at 109.20

Stephen Pope

Macroeconomic Strategist

Stephen Pope is the Managing Partner of Spotlight Group. He has worked in the world of finance since 1982 and has performed d...continued

Comments on this analysis

Your email address will not be published. Required fields are marked *


Latest Related News

USDJPY – EURJPY Forecasts

USDJPY holding below 108.70/80 is a sell signal.EURJPY up for a day or 2 then down for a day or 2 in a sideways trend. Today’s Analysis 11 Dec, 2019 USDJPY try shorts at 108.70/80 with stops above 109.00. A break higher targets 109.30/35 & 109.55/60. Try shorts at 109.65/80 with stops above 109.99. Shorts at 108.70/80 target minor support at 108.45/35. A break below… Continued

An erratic week – risk off, then back to risk on

The trade talk prospects between the US and China were dealt a blow to start the first week of December as President Trump and other key players highlighted that the phase one trade deal might not be signed as quickly as markets had expected, with the President at one point suggesting a trade deal might not be done until after the next presidential election in… Continued

The Forex Zone Forecasts – US Dollar weakens, with Pound to USD bullish

US Dollar shifts to a weaker theme across the major currencies, with the GBP USD Chart showing a bullish break The Forex Zone looks at day trade views and forecasts for the major Forex rates; EURUSD, GBPUSD, USDCAD, AUDUSD, NZDUSD and USDJPY. EURUSD: Bull theme intact A firm rebound and consolidation tone on Thursday to build on Wednesday's spike above key 1.1097 (to signal an intermediate-term… Continued

A cautious Thanksgiving week ahead of a busy week

The US-China trade talks yielded some upside last week with reports of a positive phone call between China’s top trade negotiator Liu He and U.S. Trade Representative Robert Lighthizer and Steven Mnuchin, U.S. Treasury Secretary on Tuesday. This was followed by China announcing new guidelines and penalties for the protection of patents and copyrights, which has been a key issue in the dispute. On the… Continued

The Forex Zone Forecasts – US Dollar King of G3 with Yen and Euro vulnerable

US Dollar stays strong amid a more positive spin from the US-China trade talks The Forex Zone looks at day trade views and forecasts for the major Forex rates; EUR/USD, GBP/USD, USD/CAD, AUD/USD, NZD/USD and USD/JPY. EURUSD: Still targeting key 1.0988, maybe critical 1.0939 A low-level consolidation Thursday after Wednesday's prod lower to just hold above key 1.0988 support, to reinforce the losses since last Friday’s plunge through 1.1053/51… Continued

Forex Brokers in your location