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Still a Buoyant US Dollar

Market Analysis

 USDJPY, H4 and Daily

The dollar has remained buoyant. USDJPY rallied to a four-session peak at 112.54, more than reversing the declines of late last week when markets were fretting about the escalation in the war in words between Trump and Kim. Remarks yesterday from Fed’s Yellen, that the central bank “should be wary of moving too gradually,” along with the lack of a fresh missile test by Pyongyang, helped rekindle USDJPY buying. EURUSD, meanwhile, has remained heavy, turning lower after failing to sustain a rebound above 1.1800. Before this, and after the London interbank close yesterday, a one-month low was printed at 1.1753.  North Korea remains a wildcard risk. The rogue nation has threated to detonate an H-bomb in the Pacific, demanding international recognition of it being a nuclear power, while the U.S. and allies have said that this is unacceptable. While most pundits think war is unlikely, all game theory rather than actual war mongering, a fresh escalation in tensions, which would be negative for the dollar

Despite USDJPY, remains a risk due to geopolitics, the closing above the 200 Day Moving average yesterday suggested further strength and triggered a Long Position at the opening. However opening has been missed hence entry was taken at 112,74.  The entry was confirmed with Tweezer Bottom formed yesterday on a Daily Basis, while pair is moving on the upper Bollinger Band pattern since September 12. The RSI is at 63-64 is both Daily and 4-hour charts. Significant is the fact that 20-Day MA has crossed above 50-Day MA, suggesting strength in short term. Daily Stochastic start sloping positively towards 80 level area, while at 4-hour chart is at 87.

Two targets have been set at 113.50 and 114.00 for 4-hour and Daily time frames respectively. Support area has been set at 111.50 – 111.70, which interestingly is a confluence of 61.8 Fibonacci level and ATR (14-Day).

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Andria Pichidi

Market Analyst


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