- Global financial markets have attempted to shrug off the more negative, “risk off” theme that started 2020 after the Middle East airstrike by the US last week.
- This initially saw a significant selloff in riskier assets and a rush into safe havens, like the Japanese Yen, sending USDJPY lower.
- Despite a rebound in riskier assets over the past 24 hours, we still see threat for an escalation in tensions in the Middle East and thereby see bias for a renewal of a “risk off” theme into this week.
USDJPY day trade outlook: Bias still lower, despite rebound
A Monday dip and then a bounce from just above a key retracement support at 107.69, from 107.74, but whist capped by 108.63 we still see negative forces from Friday’s selloff through key support at 107.87 (for an intermediate-term bear trend shift), to keep risks lower for Tuesday.
- We see a downside bias 108.05; break here aims for the critical 107.74/69 area and maybe towards 107.33
- But above 108.63 aims for key 108.87/92 and maybe 109.23.
An intermediate-term shift to bearish with the early January prod below 107.87
Downside risks: We see an intermediate-term bear theme to target 106.47, 105.69 and 104.40.
What changes this? A break above 108.92 sets an intermediate-term neutral tone and only through 109.73 sees an intermediate-term bull theme.
4 Hour USDJPY Chart