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Yen consolidates into Fed and BoJ announcements

Market Analysis


Yen has settled to a consolidation mode against US dollar after rallying quite strongly over the last week amid a risk-on backdrop in global financial markets, which the yen tends to correlate inversely to, and as markets anticipate the Fed and BoJ policy announcements, due today and tomorrow, respectively. The Fed is widely anticipated to announce the start of a gradual program to balance its balance sheet (quantitative tightening), and while the central bank is likely to leave the Fed funds rate unchanged, we anticipate sufficiently hawkish undertones in its revised projections and statement to give the dollar a bid. The BoJ by contrast is expected to reaffirm its commitment to ultra-accommodative policy given tepid inflation and policymaker concerns that economic growth continues lack self sustainability.

Yen is also on a consolidation mode against pound possibly due to the anticipation of August retail sales data which are due today and expected to be seen rising. The GBPYJPY has been seen the last 3 days to hold above 150.00 level , while as can been noticed in the 4-hour chart it is oscillating between 150.00 and 151.50 area. In the 4-hour chart, pair manage to hold above 20-period EMA, with RSI stable towards the overbought territory. However RSI is only at 66 right now , looking able to lift further up to higher levels. Meanwhile Parabolic SAR remain positive. Therefore, with technical view looking still positive, an entry was taken at 150.62, with target at recent highs which is at 151.50 and support at 149.90.

However, another Long entry was taken today on AUDJPY after seen the break of 89.50 resistance level. This recent high seems to be affected by the New Zealand election poll announced today, along with RBA Assist Gov Ellis Speech early in the morning but also the expectation of BoJ policy announcements tomorrow. As Reuters reported, RBA Assist Gov Ellis stated that ” monetarypolicy needed to remain expansionary globally if inflation remains low despite a pick-up in economic growth. But she maintained her view that global wage growth and price pressures will rise eventually.”

Hence AUDJPY is moving today upwards making new highs for the last 2 months. Our Entry was taken after upper fractal broke , at 89.63,  with  Daily target at 90.00. Support is at 88.80.  Meanwhile RSI is at 70, with pair in an uptrend since August 11. A weekly target was also set at 90.50 with support at 88.50.


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Andria Pichidi

Market Analyst


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