USD / JPY rate on track for a three-day downturn as the RSI sell signal emerges

The issue of the Japanese yen

USD / JPY Is on track to record a three-day decline, even as the US Treasury’s 10-year yield rises to a monthly high (1.71%), and as a relative strength index, the exchange rate is for the rest of the month. There is a possibility of a big setback. (RSI) provides a textbook sale signal.

USD / JPY rate on track for a three-day downturn as the RSI sell signal emerges

U.S. dollar/JPY Federal Reserve Board officials warn of a weaker recovery than expected, trading to weekly lows (113.62) and central banks gradually shrinking finance Support, exchange rates may continue to rise during the Fed’s blackout period.

During a speech at 2021 Milken Institute Global Conference, Fed Governor Randall QuallsThird-quarter growth may be lower than expected“, Said the person concerned.Wider and more persistent supply bottlenecks and labor shortages than many expected.. “

However, Governor Quares said that these developments were “In most cases, it will only temporarily postpone activity and its strong growth will recover in the coming months., “And the comment Federal Open Market Committee (FOMC), officials saidVery optimistic about the ability and willingness of consumers and businesses to drive strong expansion.. “

As a result, the FOMC seems to stick to its exit strategy as Governor Quores.At the November meeting, we support the decision to begin reducing these purchases and complete the process by mid-next year., ”And the deviant road between the Fed and the Fed Bank of Japan (Bank of Japan) The USD / JPY may emerge as long-term US yields continue to decline from the beginning of the year.

Nonetheless, recent price behavior opens up room for a significant pullback of the US dollar / yen as the Relative Strength Index (RSI) recedes from the overbought territory to provide a textbook sell signal. The retail sentiment slope seems ready to sustain as an exchange rate, expanding the bullish trend from the beginning of the year.

NS IG Sentiment Client Report Display only 23.07% of traders Current Net long US dollar / yen, In the ratio of short traders to long traders Are standing 3.33 to 1.

The number of Netlong traders has decreased by 4.15% from yesterday and 7.97% from last week, and the number of NetShort traders has increased by 2.52% from yesterday and 15.09% from last week. The decline in net long interest rates indicates that the USD / JPY has fallen for the first three days since August, and the rise in net short positions is brought about by the RSI providing a textbook signal.

That said US dollars / yen may be displayed While long-term government bond yields continue to recover, they tend to be bullish throughout the rest of the year, The exchange rate is Larger revisions prior to the next Fed rate decision on November 3 as the exchange rate will extend a series of low highs and lows from the beginning of this week.

USD / JPY rate daily chart

Image of USD / JPY rate daily chart

sauce: Trading view

  • The broader outlook for the US dollar / yen is the 200-day SMA (200-day SMA (200-day SMA) in the second half of 2021.109.15) It shows the same dynamics as it has been holding a positive slope since the beginning of the year.
  • NS Relative strength index (RSI) Showed similar dynamics that For the first time since the first quarter of 2021, it was pushed into the overbought territory, Recent developments have warned of a significant withdrawal of the USD / JPY as the oscillators fall back from the overbought territory and provide a textbook sell signal.
  • Then USD / JPY Is displayed Reversed the course Prior to November 2017 High (114.74)., When Lack of momentum Hold on Fibonacci overlaps from about 113.80 (23.6% enlargement) to 114.30 (23.6% retracement) Bring Range from 112.40 (61.8% retracement) to 112.80 (38.2% expansion) Return to radar.
  • The next area of ​​interest is coming From 111.10 (61.8% expansion) to 111.60 (38.2% retracement), 50-day SMA (movement below 50-day SMA)110.95) Open 109.40 (50% retracement) to the 110.00 (38.2% extended) area.

— By David Song, Currency Strategist

Follow us on Twitter @DavidJSong

USD / JPY rate on track for a three-day downturn as the RSI sell signal emerges

Source link USD / JPY rate on track for a three-day downturn as the RSI sell signal emerges

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