USD/JPY down 0.6% amid growing Trump & Kim rhetoric
Morning outlook - USD/JPY down 0.6% amid growing Trump & Kim rhetoric
In line with expectations, the currency rate continued to climb to the top, trying to reach the upper line of an ascending triangle pattern, another escalation of the North Korean crisis led to fall of the rate by 68 basis points just in two hours. Accordingly, in the beginning of this trading session the currency rate found itself not only below the updated weekly PP at 112.81 but also the 55-, 100- and 200-hour SMAs. This combined resistance suggests that the pair will be forced to continue to fall. The fact that the closest southern barrier is located only at the 112.20 mark supports the above assumption. On the other hand, as soon as markets will come down, the Dollar is going to start to gradually recover against the Yen.
In line with expectations, the currency rate continued to climb to the top, trying to reach the upper line of an ascending triangle pattern, another escalation of the North Korean crisis led to fall of the rate by 68 basis points just in two hours. Accordingly, in the beginning of this trading session the currency rate found itself not only below the updated weekly PP at 112.81 but also the 55-, 100- and 200-hour SMAs. This combined resistance suggests that the pair will be forced to continue to fall. The fact that the closest southern barrier is located only at the 112.20 mark supports the above assumption. On the other hand, as soon as markets will come down, the Dollar is going to start to gradually recover against the Yen.
Comment:
USD/JPY loses 0.37% amid missile launch
Another test of another North Korean ballistic missile expectedly led to sharp depreciation of the Dollar against the Yen. During the downfall the pair crossed the weekly S1 at 112.19, which was the only support barrier on its way. However, this active selling had a short term effect, as by the end of the day the buck traders managed to restore lost positions and return the rate back to the 112.50 level.
Because of the Fed Meeting Minutes traders with bullish sentiment most probably are going to try to push the pair to the top. However, even in case of hawkish comments it would not be easy, as northern side remains protected by a combination of the 55-, 100- and 200-hour SMAs plus the weekly PP at 112.81. In addition to that, the North Korean problem hasn’t gone anywhere.
Another test of another North Korean ballistic missile expectedly led to sharp depreciation of the Dollar against the Yen. During the downfall the pair crossed the weekly S1 at 112.19, which was the only support barrier on its way. However, this active selling had a short term effect, as by the end of the day the buck traders managed to restore lost positions and return the rate back to the 112.50 level.
Because of the Fed Meeting Minutes traders with bullish sentiment most probably are going to try to push the pair to the top. However, even in case of hawkish comments it would not be easy, as northern side remains protected by a combination of the 55-, 100- and 200-hour SMAs plus the weekly PP at 112.81. In addition to that, the North Korean problem hasn’t gone anywhere.
Comment:
USD/JPY fails to break above 112.60
As it was expected, after reaching the weekly S1 at 112.19 traders tried to push the rate to the top. However, a combined resistance formed by the 55-, 100- and 200-hour SMAs in conjunction with the weekly PP at 112.81 expectedly neutralized this attempt. Moreover, the released FOMC meeting minutes showed some uncertainty regarding the need on another interest rate hike this year, which additionally devaluated the buck against all other major currencies.
These facts suggest that the pair is unlikely to break in the northern direction today as well even if the US PPI will appear to be better than analysts expected. In support of this scenario speaks the fact that the average market sentiment remains 63% bearish. Plus the pair has formed a new descending channel.
As it was expected, after reaching the weekly S1 at 112.19 traders tried to push the rate to the top. However, a combined resistance formed by the 55-, 100- and 200-hour SMAs in conjunction with the weekly PP at 112.81 expectedly neutralized this attempt. Moreover, the released FOMC meeting minutes showed some uncertainty regarding the need on another interest rate hike this year, which additionally devaluated the buck against all other major currencies.
These facts suggest that the pair is unlikely to break in the northern direction today as well even if the US PPI will appear to be better than analysts expected. In support of this scenario speaks the fact that the average market sentiment remains 63% bearish. Plus the pair has formed a new descending channel.
An assumption about further movement of the pair was partially confirmed yesterday. On the one hand, bulls made not less than five attempts to break to the top and restore lost positions. On the other hand, a combination of the 55-, 100- and 200-hour SMAs as well as the weekly PP at 112.81 blocked each one of them.
As long as investors continue to fear further escalation of the North Korean crisis, the Yen is likely to continue to gain value against the Dollar. In support of this assumption, the average market sentiment continues to be 61% bearish. From technical perspective, there is a need to take into account that while the northern side is full of many technical indicators, the southern side contains only the weekly S1 that is located at the 112.19 level.