Dow Closes Down Over 3.25%, but USD/JPY is Only Down 0.45%
Joe Perry August 14, 2019 8:23 PM
If stocks bounce during Asia or Europe, watch for USD/JPY to move higher.
As fears of a global slowdown and the possibility of a recession increase, equities sold off though out the day. The Dow Jones Industrial Average closed down over 800 points, the biggest one-day selloff of the year.
After the DJIA retraced to the 61.8% Fibonacci retracement level from the July 31st high to the August 6th low, a flag pattern was formed. Today prices broke lower out of the flag pattern and the index now has a possible target of 24,380 in its crosshairs.
Source: Tradingview, FOREX.com
Typically, when equities have a “risk off” day, USD/JPY tends to follow Equity Indices lower. However, today, while the Dow was down over 3.25%, USD/JPY was down only 0.44%!
Source: Trading View, FOREX.com
In addition, while DJIA had an extremely bearish candle on the day, USD/JPY actually had an inside daily candle (which is neutral) and held support at 105.60!
Source: Trading View, FOREX.com
Is USD/JPY telling is that the move lower in DJIA was a bit overdone today? That may be the case. Australian Employment data is due out later, which could act as a catalyst for a move. If stocks bounce during Asia or Europe, watch for USD/JPY to move higher, and possibly at a faster pace, than stocks.
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