Monday, October 5, 2015

USD/JPY: 119.36 is key, downside exposed

FXStreet (Guatemala) - USD/JPY is building a case for lower levels, technically and fundamentally. The price has been stuck within familiar ranges since the fallout and the market's nerves increasing in mid August, ahead of Black Monday, from above the 125.20 level.

The price has been unable to recover since, with the 200 DMA offering a strong resistance level at 120.87. Risk over China's economy and Global knock effects has kept the Yen under demand while the increasing speculation that the Fed will not hike rates until 2016 is weighing on the greenback and exposes the downside in USD/JPY.

Dismall Nonfarm Payolls

Valeria Bednarik, chief analyst at FXStreet explained, "The dollar sold-off last Friday following the release of the US September employment figures, showing that the country added just 142,000 new jobs in the month, the worse so far this year, whilst wages saw no change during the same period, as average hourly earnings came in at 0.0% compared to the previous month.The data cast a shadow over a 2015 rate hike, fueling speculative selling of dollar's holdings."

USD/JPY will be interesting this week

However, the greenback was able to recover most of its ground before Friday's close in the US and makes for an interesting week ahead. We have the FOMC minutes as the main attraction for the pair and analysts at TD Securities explained that they still expect this report to reinforce the Fed's prevailing bias for a 2015 start to the normalization in rates. "And while the minutes will reiterate the data-dependency of any policy action and keep each meeting “live”, the market will be particularly sensitive to any signals of deep-seated concern about the potential disruptive impact on domestic activity from global events."

USD/JPY: bearish bias

USD/JPY is technically bearish and Karen Jones, chief analyst at Commerzbank suggested that the attention remains on the 6 week uptrend at 119.36 and this is now exposed. "Below here will target the 118.33 March low enroute to the 116.15/115.85 2015 low and the recent low. Here we also find the 2012-2015 116.37 uptrend."
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