Japanese Yen: USD/JPY (JPY=X) implied volatility could creep higher

Japanese Yen: USD/JPY (JPY=X) implied volatility could creep higher

Japanese Yen: USD/JPY (JPY=X) implied volatility could creep higher

US Dollar price action and FOMC member commentary is front and center with the kickoff of the Federal Reserve of Kansas City’s annual Jackson Hole Economic Symposium today. Forex traders and equity investors alike have anxiously awaited clarity from Fed Chair Powell and other central bank officials on US economic outlook and the future path of monetary policy decisions, which will likely be laid out over the coming days.

Markets have wrestled over what to anticipate from upcoming Federal Reserve meetings as interest rate cut expectations gyrate in response to US-China trade war developments – like Trump’s tariff whiplash – and mounting recession fears in light of the recent 2s10s yield curve inversion. That said, Fed commentary out of Jackson Hole stands to unriddle ambiguity surrounding where interest rates – and the US Dollar – might head next.

According to overnight swaps pricing, expectations are near-split between another 50-basis points and 75-basis points of interest rate cuts by year-end. Although Fed Chair Powell and the July FOMC minutes labeled the latest interest rate cut as a “mid-cycle adjustment,” markets seem unconvinced in light of US-China trade war uncertainty and its adverse impact on consumer sentiment, inflation, business investment and global GDP growth forecasts.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 107.90.

The projected upper bound is: 107.77.

The projected lower bound is: 104.98.

The projected closing price is: 106.38.

Candlesticks

During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 24 white candles and 23 black candles for a net of 1 white 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 69.4320. This is not an overbought or oversold reading. The last signal was a buy 11 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 45.38. 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 8 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 67. This is not a topping or bottoming area. The last signal was a buy 8 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 buy 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed unchanged at 106.420. Volume was 98% below average (consolidating) and Bollinger Bands were 48% wider than normal.

Open     High      Low     Close     Volume___
106.420 106.450 106.390 106.420 1,620
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 106.27 107.48 109.90
Volatility: 10 8 7
Volume: 84,956 87,220 94,140

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 3.2% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on JPY= and have had this outlook for the last 14 periods.

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