Technical Analysis

The battle lines are drawn in USD/JPY

Higher yields provide a lift

It’s all about the US and China this week and USD/JPY is no different. The pair fell to the lowest since March 25 today and dipped below 110.00.

However in the past hour it’s shown some life in a rebound to 110.14, canceling most of today’s loss. The bounce came after a surprisingly weak Treasury auction pushed US yields higher. One theory is that China boycotted the sale to send a message to the US and that’s not exactly comforting.

Technically, it’s all about the March low of 109.70 at this point. Until there is a negative indication on China-US talks, I don’t anticipate a break. But if they fall apart, we could be talking about a sharp fall. 107.50 would be in play and a fall to the flash crash lows can’t be ruled out.

On the upside, a China-US dear would put it on the path back to 112.40 while more talks would keep it locked in this rage.

Normally the trade would be to buy near here with a tight stop but you risk getting caught out in a gap, especially as the weekend draws near.


Articles You May Like

Zijin of Global Times: China will certainly retaliate from barbaric suppression of Huawei
Gold Price Outlook Hinges on US Dollar, Bond Yields Divergence
US Sec. of State Pompeo: US does not seek war with Iran – BBC
EURUSD Monthly Open Range in Focus Ahead of Germany GDP Report
Major indices move higher today led by tech/high flying stocks

Leave a Reply

Your email address will not be published. Required fields are marked *