Japanese Yen: USD/JPY (JPY=X) – Fiscal Stimulus Hopes Sink Demand for Safe Haven Yen

Japanese Yen: USD/JPY (JPY=X) – Fiscal Stimulus Hopes Sink Demand for Safe Haven Yen

Japanese Yen: USD/JPY (JPY=X) – Fiscal Stimulus Hopes Sink Demand for Safe Haven Yen

The Dollar/Yen is trading higher on Tuesday and the price action indicates the Forex pair could move a lot higher this week amid speculation that several major governments will announce stimulus measures this week.  Yields are rising in the United States, Germany and Japan as well as global equity markets – an early indication that “risk is on”.

Japan to Announce Stimulus Package

Japan will unveil a second package of steps to offset the impact of the coronavirus outbreak, focusing on support for small businesses, Finance Minister Taro Aso says, as concerns mount about risks to the country’s fragile economy.

The government will tap the remainder of this fiscal year’s budget reserve, worth about 270 billion yen, to help finance the package, Aso said.

However, he says there is no need yet for a bigger extra budget, adding the fallout from the outbreak so far is not akin to the 2009 financial crisis.

The government’s move will likely affect the Bank of Japan’s decision on what steps it takes to underpin the economy at its March 18-19 policy review.

Japan will boost its special financing for small and mid-size firms hit by the coronavirus to 1.6 trillion yen, up from the roughly 500 billion yen previously announced, according to a government document seen by Reuters.

As part of the second package, Prime Minister Shinzo Abe has said a government-affiliated lender would offer loans in effect at no interest and without collateral to small firms that have seen sales slump from the virus outbreak.

Australian PM Scott Morrison Says Stimulus Package Will Be Announced Soon

Australian Prime Minister Scott Morrison said on Tuesday the government will soon announce measures to stimulate an economy hammered by the effects of the coronavirus outbreak.

A report in the Australian Financial Review on Monday said the government was planning measures worth about A$10 billion, abandoning plans for a budget surplus in the current fiscal year.

“Our objective is this – keep people in jobs, keep businesses in business, and ensure we bounce back stronger on the other side,” Morrison said at the Australian Financial Review conference in Sydney.

“We must favor measures that will lift productivity to enable the Australian economy to sustain an even stronger growth trajectory than we were on prior to the crisis.”

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 108.31.

The projected upper bound is: 107.63.

The projected lower bound is: 102.67.

The projected closing price is: 105.15.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 26 black candles for a net of 4 black candles.

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 47.2656. This is not an overbought or oversold reading. The last signal was a buy 1 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 38.08. 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 1 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 -78. This is not a topping or bottoming area. The last signal was a buy 0 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 9 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.410 at 105.220. Volume was 91% below average (consolidating) and Bollinger Bands were 328% wider than normal.

Open     High      Low     Close     Volume___
105.640 105.670 105.020 105.220 8,079
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 106.52 109.05 108.28
Volatility: 28 15 9
Volume: 129,685 95,568 89,030

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 2.8% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume out of JPY= (mildly bearish). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 8 periods.

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