Analys från DailyFX
USD/JPY Spikes Higher Following Yellen and Kuroda, US PCE Next
Talking Points:
– USD/JPY easing some pressure from Japanese officials by gaining some distance from 100.00
– Immediate resistance appears to be 102.50, but a channel breakout might be required for more bullish conviction
– US PCE and Japan’s Jobless rate next highlights on the docket
The USD/JPY is approaching a potential near term resistance level at 102.50 at the time of writing, after the pair spiked higher following the Yellen and Kuroda speeches at Jackson Hole.
The Fed Chairwoman said that “the case for an increase in the federal funds rate has strengthened in recent months”, leading to a rise in near term Fed rate hike speculation, while BOJ Governor Kuroda said the central bank will not hesitate to expand stimulus if needed, emphasizing the divergent monetary policy paths of the two central banks.
Looking ahead, US PCE might provide further grounds for rates speculation, while Japan’s jobless rate is also set to take place heading into Asia.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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July’s US PCE figures are set to hit the wires 12:30 GMT. The Fed’s favored inflation gauge is expected to tick down to 1.5% from the prior 1.6% in the core figure.
The market usually pays more attention to the CPI figures, but given the perceived “fertile ground” for Fed rate hike bets in the context of the Yellen speech, the numbers may get more attention this time. With inflation being the “missing piece” for the Fed’s dual mandate, a higher than expected reading could add to near term rate hike bets, further assisting this latest US Dollar push.
Japanese July Jobless Rate is set to be released later on as well, and is expected to remain unchanged at 3.1%.
The Yen has been relatively unfazed by recent key domestic data, perhaps as the market assumed the BOJ might be running out of options to ease policy further.
Against this backdrop, it will be interesting to see if the recent comments by Kuroda could see the market looking at intrinsic weakness in the Japanese economy as a sign of higher probability of easing down the line.
With COT data showing positioning is heavy long the Yen, continued US Dollar strength might gain fuel on short covering as well.
USD/JPY Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The Yen is expected to be the most volatile major currency versus the US Dollar based on 1-week and 1-month implied volatility measures.
In turn, this may suggest that break out type trades might be appropriate ahead.
USD/JPY 30-Min Chart (With the GSI Indicator): August 29, 2016
(Click to Enlarge)
The USD/JPY is trading beneath a potential resistance zone below 102.50 at the time of writing, with GSI calculating higher percentage of past movement to the upside in the short term.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here, and download the Trade Station version here.
Further levels of resistance might be the area below 103.00, 103.30, and a zone around 103.60.
Levels of support might be 102.00 followed by the round 00s and 50s.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
We studied over 43 million real trades and found that traders who successfully define risk were three times more likely to turn a profit.
Read more on the “Traits of Successful Traders” research.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 73.2% of FXCM’s traders are long the USD/JPY at the time of writing; reducing shorts quickly on the move higher, perhaps implying that retail traders are taking profits/ positions off too quickly (see the “Traits of Successful Traders” research).
You can find more info about the DailyFX SSI indicator here
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
You can receive Paul’s analysis directly via email bysigning up here.
You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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