Yen maintains its Bullish Bias over 109

USDJPY, H4 and Daily 

The dollar and yen trade softer versus most other currencies in fairly quiet early-week trading in Asia. The yen has traded moderately softer versus other currencies, with EURJPY edging out an 8-day high at 131.37, and AUDJPY matching the two-week high that the cross posted on Friday, at 82.70.

Sentiment in Asian markets was one of cautious optimism. Signs of easing Sino-U.S. trade tensions, and the biggest weekly rise in the USA500 last week in two months, and a 0.4% gain in USA500 futures today, aided equity markets higher across Asia, though a terrorist attack in Indonesia and threats from the Trump administration to impose sanctions on European companies that do business with Iran presented reasons for caution.

In data today, Japan’s April PPI rose to a rate of 2.0% y/y, matching the median forecast. Fed tightening expectations have moderated following some less strong than anticipated data out of the U.S., including last Thursday’s release of still-benign CPI data. USDJPY’s uptrend that commenced from sub-105.0 levels looks to have regain some of its thrust, after being consolidating for the last 2 weeks. It is currently traded close to day’s R1 at 109.55, holding above the 20- DAY MA and the 50% Fibonacci level at the round 109.00 level. The latter consider be a key level since, we have seen the pair closing above that level, for 14 consecutive days. Therefore the Daily support of the pair in long-term remains within the 108.50-109.00. 

In long term, the pair remains in the upside momentum, based on the momentum indicators’ observation. The RSI, Stochastics and MACD lines hold above the neutral zone.  However, the Stochastic fast line crossed below the Slow line, suggesting that in short term, it is likely to see some weakness or consolidation on the pair. The flattened of the 200-DAY  MA, its another sign for the continuation of the consolidation mode.  Resistance is at 110.15-110.00,  which is the confluence of 200-DAY MA, the 1.8% Fibonacci level and the latest 2 high fractals. Only an break of the range 108.50-110.00, should alert in long-term a bullish or bearish future performance. A slip below 108.50, would open the area for a possible retest of the 38.2% Fib. level at 108.00 and the 107.50.  A flip above the 61.8% Fib. level should see gain up to 2017 levels such as the 111.00-112.00 area

In the 4-hour chart, the Short-term momentum indicators are also pointing to a continuation of the bullish bias. The RSI indicator holds just above the 50 level, Stochastic lines rejected oversold territory and are currently pointing upwards, while the MACD oscillator is neutral.  The pair is at the upper Bollinger Bands pattern, with the crush of PP level and 50-period MA, at 109.35, acting as immediate support level. Resistance is at R1 109.60. 

On the break today of the R1, the next immediate resistances are 109.77 and 109.90. On the flip side, further losses should see a re-challenge of the 109.10 – 109.00, acting as support area.

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Andria Pichidi

Market Analyst


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