Analys från DailyFX

USD/JPY Technical Analysis: Yield Curve Control from BoJ Gets Its Wings Early

Published

9 år ago

21 november, 2016

DailyFX

Talking Points:

USD/JPY Technical Strategy: Wobbles Upon Tagging 50% Retracement of 2015/16 Decline
Macro Forces Favor Further JPY Depreciation
Trade-Surplus Comes From Large Drop In Imports Driven By Energy’s Fall

The JPY weakness could continue to decline based on the divergence of monetary policy and the potential policies of President-Elect Trump that have had U.S. Treasury yields pushing ever-higher. In September, the Bank of Japan converted their monetary policy (one of three arrows of Abenomics) to focus on Yield Curve Control, which was focused on keeping the JGB 10-yr Yield at ~0%.

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In addition to relative inflation expectations and therefore, monetary policy divergence, a wider spread in government debt is a key contributor to strong moves in the FX markets. This could play nicely into the hands of the Bank of Japan who recently saw a second monthly trade surplus in October as a further sell-off in U.S. Treasuries in fear of coming inflation while the BoJ buys JGB’s to suppress the yield keep the spread of US/JP 10-year yields diverging further.

We’ve noted earlier that on a relative scale the JPY continues to be the most aggressively sold currency in G10 post-election and the Yield Curve Control alongside inflation implications of U.S. Fiscal Policy in a super-majority Congress could keep the JPY weak for some time.

D1 USD/JPY Chart: USD/JPY Has Broken Months’ Worth of Resistance in the Last Week

Chart Created by Tyler Yell, CMT, Courtesy of TradingView

Price Action in USD/JPY has seen the price to move to the 50% retracement in near-magnetic fashion after clearing the previously mentioned chart-hurdle at the 200-DMA as well as the post-Brexit high of 107.49. Given the sharp rise in U.S. yields and the US/JP sovereign spread widening that we mentioned above, we encouraged traders to be on the watch for USD/JPY rush in or fear of missing out a trade that could keep USD/JPY bid.

The sharp moves from early November are being treated as part a bottoming process. The Bullish view that I’m holding has been validated. This view will remain if the price holds on a closing basis above the 200-DMA at 106.40. If the price breaks above the 50% retracement of the 2015-2016 down (111.24), we’ll then shift focus to the 61.8% retracement of the same zone at 114.20.

Should the fundamental trends continue that we’ve seen and discussed above, we’ll continue to anticipate a further price advance. Only a break below the 21-DMA (currently at 106.12) would shift our bias from Bullish to Neutral.

Shorter-Term USD/JPY Technical Levels: November 21, 2016

For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.

Analys från DailyFX

EURUSD Weekly Technical Analysis: New Month, More Weakness

Published

8 år ago

30 september, 2017

DailyFX

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.

Analys från DailyFX

Euro Bias Mixed Heading into October, Q4’17

Published

8 år ago

29 september, 2017

DailyFX

Euro Bias Mixed Heading into October, Q4'17

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

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Analys från DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

Published

8 år ago

29 september, 2017

DailyFX

British Pound Reversal Potential Persists Heading into New Quarter

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