Japanese Yen: USD/JPY (JPY=X) Strong Appetite for Risk

Japanese Yen: USD/JPY (JPY=X) Strong Appetite for Risk

Japanese Yen: USD/JPY (JPY=X) Strong Appetite for Risk

The Dollar/Yen posted a strong gain last week on the back of a sharp rise in U.S. Treasury yields. This widened the spread between U.S. Government bond yields and Japanese Government bond yields, making the U.S. Dollar a more attractive investment. After posting a mostly sideways trade for two weeks, the Dollar/Yen broke out to the upside to its highest level since December 20. The catalyst behind the rally was the stronger-than-expected U.S. Gross Domestic Product report, which helped drive up the chances of at least one rate hike by the Fed in 2019.

The direction of the USD/JPY this week is likely to be primarily influenced by U.S. Treasury yields and appetite for risk. Rising yields and equity prices should continue to make the safe-haven Japanese Yen a less-desirable asset.

Optimism over a trade deal between the United States and China is the wildcard this week. According to a report from Bloomberg on Friday, the two economic powerhouses are close to completing a deal which will essentially end the year-long trade dispute. However, investors could turn cautious if the agreement lacks clarity or important details.

On Friday, all eyes will be on the U.S. Non-Farm Payrolls report. Last week, Fed Chairman Powell said the labor market is strong. This report is expected to show the economy added 185K jobs in February. The Unemployment Rate is expected to dip to 3.9% and Average Hourly Earnings are estimated to have risen by 0.3%, up from 0.1%.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 113.22.

The projected lower bound is: 110.60.

The projected closing price is: 111.91.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 2 black candles for a net of 5 white candles. During the past 50 bars, there have been 29 white candles and 19 black candles for a net of 10 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 89.5880. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 12 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 67.63. 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 41 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 209.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 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 34 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.020 at 111.880. Volume was 60% below average (consolidating) and Bollinger Bands were 18% narrower than normal.

Open High Low Close Volume___
111.760 112.010 111.710 111.880 41,247

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 111.06 109.84 111.34
Volatility: 5 8 7
Volume: 90,366 93,915 105,154

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 0.5% above 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 volume flowing into and out of JPY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on JPY= and have had this outlook for the last 25 periods.

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