Japanese Yen: USD/JPY (JPY=X) Begins with ‘Cautiously Bullish’ Tone

Japanese Yen: USD/JPY (JPY=X) Begins with ‘Cautiously Bullish’ Tone

Japanese Yen: USD/JPY (JPY=X) Begins with ‘Cautiously Bullish’ Tone

Mixed comments about the status of trade talks between the United States and China encouraged some investors to seek shelter in the safe-haven Japanese Yen although U.S. stock market investors seemed to read the developments as bullish. This should be the focus for investors this week if last Friday’s price action is any indication.

Hopes that the United States and China may soon end their trade war after a pair of high-ranking White House officials drove down demand for the safe-haven Japanese Yen on Friday. This move could continue this week if the optimism prevails.

White House economic adviser Larry Kudlow said on Thursday that negotiations over the first phase of a trade agreement with China were coming down to the final stages, with the two sides in daily contact.

Speaking after an event at the Council on Foreign Relations late on Thursday, Kudlow told reporters that a deal was close though “not done yet,” Bloomberg reported.

“We are coming down to the short strokes,” Kudlow said in Washington. “We are in communication with them every single day right now.”

U.S. Commerce Secretary Wilbur Ross said in an interview on Fox Business Network Friday that there was a very high probability the United States would reach a final agreement on a phase one trade deal with China.

“We’re down to the last details now,” Ross said.

Furthermore, there was a potentially bullish development over the week-end. According to Chinese state media, Chinese Vice Premier Liu He spoke with Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer about a phase-one trade deal in a phone call Saturday morning.

The two sides had “constructive discussions” about “each other’s core concerns” and agreed to remain in close contact, Xinhua reported. The call came at the request of Mnuchin and Lighthizer, according to Xinhua.

If it were “unnamed sources”, or anyone other than Kudlow and Ross making the comments about a trade deal, or even President Trump, I’d still be skeptical about how close the U.S. and China are to completing “phase one” of a bigger deal. The fact that Chinese state media further adds to the optimism surrounding a deal.

Nonetheless, there are still skeptics out there. “To be blunt, such rhetoric is more or less the same as Steven Mnuchin (who) said months ago that a deal was ‘99% done’, Commerzbank analysts wrote in a note to clients, though they acknowledged the comments had benefited sentiment.

Given the past history of the two economic powerhouses during negotiations and the upbeat developments, I am going to start the week “cautiously bullish” the USD/JPY.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 109.73.

The projected lower bound is: 107.85.

The projected closing price is: 108.79.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 35.4166. This is not an overbought or oversold reading. The last signal was a sell 5 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.91. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 69 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 1. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 3 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.030 at 108.760. Volume was 97% below average (consolidating) and Bollinger Bands were 47% narrower than normal.

Open High Low Close Volume___
108.810 108.870 108.750 108.760 2,670

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 108.94 108.23 108.99
Volatility: 5 6 7
Volume: 79,462 88,181 89,960

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX JPY= is currently 0.2% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into JPY= (mildly bullish). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 26 periods.

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