Home Forex Yen Remains Robust with Bleak Dollar Outlook

Yen Remains Robust with Bleak Dollar Outlook

by kyngsam


USD/JPY ANALYSIS

The Japanese Yen (JPY) has remained resilient in opposition to the US Dollar regardless of vaccine optimism. The safe-haven forex might have room to understand additional in opposition to the weakening Greenback however how will this unfold as we enter the December?

TECHNICAL ANALYSIS

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USD/JPY Weekly Chart:

USD/JPY weekly chart

Chart ready by Warren Venketas, IG

The weekly chart has been fluctuating between the 103.00 – 105.00 area over the previous few weeks after bears pushed beneath the multi-year descending triangle assist (105.00). Makes an attempt to remain above the 105.00 degree have been unsuccessful evident by the lengthy higher wick candles. This lack of conviction to the upside has rooted the 105.00 degree as a powerful resistance goal.

This longer-term outlook appears to be skewed towards additional draw back which might goal the March low assist zone (101.18) which coincides with the 50% Fibonacci degree at 100.91.

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USD/JPY Day by day Chart:

USD/JPY daily chart

Chart ready by Warren Venketas, IG

Quick-term price action displays a powerful downward trend inside a structured channel (blue). The highs inside the channel have established a resistance on the Relative Strength Index (RSI) across the 59 degree (purple). Whereas this degree remains to be a distance away from topside resistance, it will likely be fascinating to see whether or not or not worth breaks out of the current symmetrical triangle and transfer towards the higher finish of the channel or will upside momentum fade, exhibiting much less conviction from bulls.

A affirmation breakout from the triangle formation to the upside will convey the 105.00 psychological level into consideration after which, the current swing excessive 105.67 as prolonged resistance.

A break to the draw back – which corresponds to conventional principle regarding symmetrical triangles. the place a breakout within the path of the previous pattern is favored might see the November low (103.17) as preliminary assist and consequently 103.00 thereafter.

Additional your data with different fashionable continuation patterns embrace the rising wedge, falling wedge and pennant patterns!

DOLLAR WEAKNESS MAINTAINS YEN STRENGTH

The Yen has weakened in opposition to most crosses of current, however the Greenback has supplied a stronghold for Japanese forex. The buck is dealing with an uphill battle as many market individuals predict some Fed intervention within the type of extra Quantitative Easing (QE).

The US Dollar has proceedd its decline which has outweighed any form of risk-on sentiment from the market. Ought to the Fed avoid financial easing this December, the Greenback might pullback losses in opposition to the Yen. Constructing as much as the announcement, there’ll seemingly be a sustained downward pattern on the pair – ceteris paribus.

US PMI DATA COULD PROVIDE SHORT-TERM DOLLAR APPRECIATION

All eyes will likely be on US PMI knowledge right this moment (14:45GMT and 15:00GMT) which is estimated above the 50 benchmark degree – that means that the economic system is usually increasing.

Take and in-depth take a look at How Forex Trader’s Use ISM Data

This may very well be optimistic for the US Greenback as market response to figures better than 50 over the previous few months have resulted in Greenback power in opposition to the Yen. This may very well be an identical end result right this moment ought to knowledge are available as anticipated or higher. Any vital deviation from estimates might result in giant worth swings both manner.

DailyFX Economic Calendar

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Trading Forex News: The Strategy

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Key factors to think about:

  • USD/JPY: 105.00 psychological degree
  • RSI 59 resistance degree
  • US PMI knowledge

IG CLIENT SENTIMENT DATA POINTS TO A SHORT-TERM SHIFT IN MOMENTUM TO THE UPSIDE



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 2% 13% 5%
Weekly 0% 8% 3%

IGCS reveals retail merchants are at the moment web lengthy on USD/JPY, with 66% of merchants at the moment holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment, and the very fact merchants are net-long is suggestive of a bearish bias on the pair nonetheless, resulting from a better web change in brief positions relative to lengthy positions we revert to a bullish bias.

— Written by Warren Venketas for DailyFX.com

Contact and comply with Warren on Twitter: @WVenketas





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