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Yen pressured amid Risk-On backdrop

Market Analysis


On Wednesday, I wrote: On the euro side of the equation, data have been generally encouraging, which along with the abatement of political existential risk in the Eurozone, looks set to pave the way for the ECB to finally make a start at de-stimulating monetary policy, while a stronger Yen weighed overnight on Japanese exporters, and the recent geopolitical concerns with North Korea’s test missiles. Hence a quick Short position in the hourly chart was taken in the EURJPY, with entry at 124.30, after pair broke the lower Bollinger Band. Target was set at last week’s low at 123.40. Pair has already broken 200-period EMA in the 1-hour chart, while RSI is at 25 slopping further down. In the 4-hour chart, Parabolic SAR turned negative in the morning.” – Target was achieved yesterday morning for a net gain of 90 pips.

A reversal of the trend in the hourly chart has been noticed however, since yesterday at US Market Open, with the yen under-performing amid a risk-on backdrop in Europe, where equities have rallied. With odds for a June Fed rate hike lessened this week, and the ECB expected to remove the easing bias in the forward guidance at the June policy meeting, the euro is possible to see further upside potential.

In the 4-hour chart, EURJPY has two consecutive bullish sessions, while a Long position was taken after the pair broke the 50-period EMA. Entry was at 124.33. By using ATR, Target 1 was set at 124.90, and Target 2 was set at 125.40. In the Daily chart EURJPY, presents support in the last 2 weeks at 122.50, in shorter timeframes such as 4-hour chart an immediate support level is at 123.00. The pair currently move in the upper half of Bollinger bands pattern. Parabolic SAR turned positive earlier. The RSI is neutral in 4-hour chart, while in the Daily chart is at 64 sloping up again towards overbought territory. Nevertheless, in the 1 hour chart, 50-period EMA crossed up the 200-period EMA.

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Andria Pichidi

Market Analyst


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