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Yen: Strongest Currency for the day

Market Analysis

AUDJPY, H4

Today, USDJPY is lower after briefly rallied at Asia-Pacific open, leaving a peak at 112.98, seven pips shy of last week’s two-month high. The pair has since ebbed back to around 112.50. Risk appetite was high in Asian markets, though the Shanghai Composite hit a seven-month low (as a consequence of Beijing’s attempts to cool China’s property market), and European bourses headed southward.  EURCHF is on the up as franc safe-haven premium unwinds following the French election, while CHFJPY is also up strongly, by 0.7%, since CHF consider be the weakest currency for the day and Yen the strongest one. The weaker franc will be joyous news for Swiss policymakers, which consider it one of the world’s most over-valued currencies in purchasing power parity terms.

Yen remained strong also against other currencies such as Australian dollar. Technically, the head and shoulders pattern noticed in the 4-hour chart of AUDJPY, peaked my interest. Consequently, I have entered a SHORT position at 83.30 with an initial target 1 at the 50.0 Fibonacci level at $83.00, which is a confluence of ATR in 4-hour chart. Target 2 is at 82.70. Support was set at 84.00.

The crossing today of 20-period EMA below 50-period EMA suggested that further downside is likely to continue, while the pair broke earlier the significant 200-period EMA earlier and moves below that level. RSI remains neutral at  42 but slopes down from the overbought high at 76 last week. In the daily chart, the parabolic SAR turn negative on Friday. MACD remains negative in both 4-hour and Daily charts.

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Andria Pichidi

Market Analyst

HotForex

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