Technical Analysis

Japanese yen loses further ground as equities extend climb higher

USD/JPY hits a session high of 108.34


That sees price contending with the 23.6 retracement level of the swing move lower from last week. That’s the resistance level which helped to limit overnight gains so a break above that will allow buyers to test swing region resistance around 108.40-45 next.

However, the key near-term level to watch out for in the pair is the 100-hour MA (red line) @ 108.53. Offers are also lined-up around 108.50 so that will be a key area of interest for sellers to defend if we do move there later on in the day.

The extension higher in yen pairs owes much to the move higher in equities, with US futures climbing by 0.6% now:

E-minis 05-06

In the bigger picture, I’m still skeptical about the bounce in stocks after yesterday’s sharp rally. I reckon all it takes is just one fresh negative headline on the trade front and it would be enough to reignite fears among market participants.

However, given recent optimism from the Mexico camp and markets focusing on the Powell put, perhaps we’ll be in store for another strong day for US equities later. In any case, price action and technical levels will define the trade opportunities so as long as you stick to that, there’s nothing wrong with either conviction in my view.

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