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USDJPY lower on data and prevailing Geopolitics

Market Analysis


The cooler core U.S. CPI reading was the main driver of the market, with the Fed showing concern over persistently low inflation. Meanwhile, the prices in major currency pairs and commodities seems to be supported by the concurrent drop in the US dollar. One of the most volatile currency pair, USDJPY, drifted by 57 pips, down to 111.68, breaking the significant- 200 Day Moving Average at 111.80.

The particular cross is getting lower for the last 6 days after the US NFP on Friday 6. Today it seems that has found new driver to the downtrend, since the particular mixed data out of US, along with the geopolitics concerns suggesting further strength to the Yen against US Dollar. The Concerns that North Korea is readying itself for another missile test, that might take place at the Chinese Communist Party on October 18, have kept end-of-week trading cautious — a backdrop that typically gives the yen an underpinning.

Hence as can be noticed in the 1-hour chart, despite the up corrections that we have seen on USDJPY today, and in general since Monday, the pair is getting lower. This can be confirmed by the lower upper and down fractals, along with the lower Bollinger Band pattern that getting extended, suggesting further intraday weakness. Stochastic is at 32, with further downwards steam. Nevertheless, in higher time-frames such as 4-hour one or Daily, USDJPY performance seems to creating a Round top, which can be consider as a very bearish pattern once confirmed. In the daily timeframe, the pair is moving is the lower Bollinger pattern as well and above 50-DAy MA, while it is currently trading at 200-Day MA. The Daily Stochastic crossed oversold territory, while significant is the fact that the Fast line in MACD looking ready to turn lower.

Therefore downtrend is likely to continue, with next possible targets at 111.50 up to 111.10, with support at 112.60-112.80 area.



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Andria Pichidi

Market Analyst


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