USD/JPY in danger of breakdown as stocks weaken again
Fawad Razaqzada October 17, 2018 10:02 AM
It has been a quiet-ish first half in the markets, but things could potentially turn volatile now that US investors have come back to their trading desks. At the time of writing, the pound was still lower following this morning’s release of disappointing UK inflation figures, while the US dollar was trading higher against most currencies except the yen. The Japanese currency was outperforming perhaps because of the weakness in the stock market which were coming off their highs following yesterday’s big bounce. Today’s main fundamental event for FX traders is the FOMC meeting minutes which will be published later on and may contain a few surprises.
As mentioned, with the prospects of another sell-off in the stock markets still alive, the USD/JPY could be in danger of breaking down amid potential safe haven flows into the yen. Technically, the USD/JPY is looking overall weak because of the fact it couldn’t hold above the pivotal area between 112.58 and 113.15 following its breakout at the end of September. That false breakout has already led to a sizeable downward move, although in recent trade the USD/JPY has found some support off its bullish trend line and 50-day moving average around 111.65-85 area. Thus, going forward, if this area were to break down then we could potentially see a sharp acceleration to the downside. However, if the trend line holds and price eventually reclaims that pivotal 111.65-85 area, then in this case things would look very bullish again.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.