Japanese Yen: USD/JPY (JPY=X) rises above 107 vs dollar, highest since January

Japanese Yen: USD/JPY (JPY=X) rises above 107 vs dollar, highest since January

Japanese Yen: USD/JPY (JPY=X) rises above 107 vs dollar, highest since January

The U.S. dollar fell to a three-month low against the euro and dropped to its weakest against the Japanese yen since early January as the prospect of monetary easing by the Federal Reserve knocked demand for the U.S. currency.

The euro hit a three-month high of $1.1412 EUR=EBS , having gained 2.0% from a two-week low of $1.1181 touched a week ago as the dollar has lost steam. It last stood at $1.1396.

The dollar was last down 0.3% at 106.97 JPY=EBS , having only fallen below 107 yen per dollar in the January flash crash and then last back in April 2018.

The yen has benefited from investor nerves over tensions between the United States and Iran. Tehran said on Tuesday that U.S. sanctions permanently closed the path to diplomacy between the two countries.

Selling in the dollar has accelerated after the U.S. Federal Reserve last week signalled it would cut interest rates before year-end on mounting worries about an economic slowdown and the fallout from tariff wars between U.S. President Donald Trump and China.

U.S. 10-year Treasury yields US 10YT=RR again fell below 2%in earlier trading, reducing the interest rate advantage the dollar has enjoyed over rivals in recent years.

“We expect the Fed’s pre-emptive cuts to temporarily weigh on the USD, especially vs. G10 currencies, as the US rates advantage compresses amid an environment of slowing global growth,” said Marvin Barth, foreign exchange strategist at Barclays.

“However, the Fed’s ability to support an extended US expansion stands in contrast to clear sustained slowing – and rising risks – in China and Europe, implying a USD rebound in 2020.”

The dollar index .DXY against a basket of six major rivals fell to its lowest level in three months to 95.843, having lost 1.7% during the latest five sessions, and was last down 0.1% at 95.909.

Fed Chairman Jerome Powell and a few other of its policymakers are due to speak later on Tuesday.

Investors are waiting to see whether Trump and Chinese President Xi Jinping would at least call a truce in their tradewar when they meet at the G20 summit in Osaka late this week.

Trump considers his meeting with Xi an opportunity to”maintain his engagement” and see where China is on their trade dispute, a senior U.S. official said on Monday.

Kazushige Kaida, head of forex at State Street Global Markets in Tokyo, said he believes the current market consensus is that the two leaders are “unlikely to agree on a deal”.

Elsewhere, sterling benefited from the broad dollar weakness, rising to $1.2765 GBP=D3 , up 0.2% on the day.

The pound, however, is likely to remain under pressure because of Brexit concerns, with euro sceptic Boris Johnson the front runner to become the next leader and prime minister.

The euro was slightly firmer against the Swiss franc, at 1.1089 francs.

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 109.31.

The projected upper bound is: 107.84.

The projected lower bound is: 105.89.

The projected closing price is: 106.87.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 7 black candles for a net of 5 black candles. During the past 50 bars, there have been 19 white candles and 30 black candles for a net of 11 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 13.5923. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 13 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 23.57. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 14 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 -159.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 13 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 2 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.310 at 106.970. Volume was 48% below average (neutral) and Bollinger Bands were 11% wider than normal.

Open High Low Close Volume___
107.290 107.400 106.770 106.970 46,622

Technical Outlook
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period     50-period     200-period
Close: 107.93 109.70 111.09
Volatility: 5 6 7
Volume: 84,291 88,588 99,745

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 3.7% 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 36 periods. Our momentum oscillator is currently indicating that JPY= is currently in an oversold condition.

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