Yen rallies as risk off theme looks to resume (USDJPY forecast)

Intermediate
  • An attempt to a shift away from the late February “risk off” panic with a rebound effort by equity markets to start March on Monday, after the plunge lower across global equity averages in latter February.
  • This reflected anticipation of a multilateral intervention by Central Banks and Finance Ministers in reaction to the threat to the global economy from the spread of the coronavirus.
  • Although the Reserve Bank of Australian cut interest rates by 0.25% and the US Federal Reserve delivered an intermeeting rate cut of 50bps on Tuesday, markets have been left wanting more, with global stock indices eventually dipping back lower after Tuesday’s Fed rate cut.
  • This has left the US Dollar weakening again versus the Japanese Yen, and here we focus on the outlook for USDJPY.

USDJPY day trade outlook: Bear forces resume

A plunge lower Tuesday to a new bear move low through 107.33 and 107.01 supports, to reinforce Monday’s rebound failure from just above 108.50 resistance (at 108.58), PLUS leaving bear forces from the extremely aggressive late February selloff through key 108.26 support (for an intermediate-term bear shift), to keep the risks lower into Wednesday.

We see a downside bias for 106.82; a break below aims for key 106.47, maybe even 106.03/01 and 105.69.

But above 107.90/96 targets 108.58, which we would look to try to cap; above opens risk up towards 109.06.

USDJPY intermediate-term outlook

The end of February plunge through 108.26 signalled an intermediate-term bear shift.

Downside threat: We see an intermediate-term bear trend to aim for 106.47, 105.69 and 104.40.

What changes this? Above 110.35 signals an intermediate-term shift form bearish straight to an intermediate-term bull trend

4 Hour USDJPY Chart

USDJPY chart

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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