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USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Japanese Yen Technical Forecast Issues:

  • NS JPY Is a carry trade “funding currency” and is a risk-oriented Forex perspective that is as sensitive to sentiment as a stock index.
  • As something like Dow Like slides, pairs GBPJPY, CADJPY When NZDJPY The desire for very low-yielding carry trades recedes as they fall
  • USDJPY Given the status of the dollar’s own safe haven, it’s one of the more confusing circle crosses. EURJPY May be a good offset against this

Japanese Yen Technical Forecast: Bullish

Last week we saw the serious driving force of risk aversion that was lurking in the market throughout last month.With a benchmark like S & P 500 Responding to widespread tides until November, many macromarket participants have pushed forward with the assumption that speculative appetite is rising unabated. Still, looking at global indexes, emerging market assets, and FX-based carry trades shows a very different situation. Measures in these markets have fallen for several weeks, and last week’s rise in volatility has finally infected the proud US index and has finally begun to extinguish complacency bulls.

For the yen cross, this has finally changed to USDJPY. The benchmark stalled after an impressive 115 bullish break caused by the dollar rate forecast rate, reducing previous resistance with the largest one-day plunge since March 20, 2020 last week. The slide continued last week, but at 112.25 / 50 we did more to increase the weight of support. If risk aversion continues or the Fed’s predictions are relaxed, the resistance of this previous range and breaking the 50% Fib of the range over the last 6 years will bring serious technical weight.

USDJPY chart with 50-day SMA (daily)

USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Created chart Tradingview platform

One of the complications of USDJPY is that both currencies are considered some form of “safe haven”. In this case, the yen is more sensitive, but the dollar’s own attachment to the still-active Fed’s interest rate forecasts can cause problems when trends could otherwise unfold. There are several other crosses, such as GBPJPY and CADJPY, that have generous rate predictions that are exposed to risk if risk aversion continues. However, I like NZDJPY best in this regard. Last week’s cross fell below trendline support and dates back to June last year. There is also some support in the area from 76.00 to 74.00, with some growth after a 5 week descent, but if risk aversion continues in earnest, this pair is much easier.

50-week moving average (weekly) NZDJPY chart

USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Created chart Tradingview platform

We are also paying attention to whether risk trends are stable and recover in line with seasonal expectations for December so that we can always respond to alternative scenarios. Even if that happens, the bullish recovery is unlikely to be prosecuted, given the nature of liquidity. Therefore, rebounds such as NZDJPY are not particularly suitable because interest rate expectations are likely to be suppressed. Taking the obvious carry trade perception out of the equation, EURJPY isn’t really much traded in terms of expecting a strong rate of leverage from the yen. If the persistent bearish trend of the last two months collapses with a move above 128.50, this is a good swing to return to the range.

EURJPY chart with 50-day SMA (daily)

USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Created chart Tradingview platform

Looking at speculative positioning, futures traders (via CFTC’s COT report) have moved from multi-year lows on highly correlated images (reversals) to USDJPY price actions on weekly charts. It shows that it is starting to reverse. There is still a heavy net long USDJPY view (about 80,000 contracts) that could easily facilitate a quicker withdrawal if the technical hurdles are crossed.

USDJPY chart with net speculative futures positioning (weekly)

USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Created chart Tradingview platformUse data from CFTC



USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

Source link USD / JPY on reversal cusp as all Yen exceeds the yield on the risk trend

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