Japanese Yen: USD/JPY (JPY=X) Trade optimism weighs on safe-haven assets

Japanese Yen: USD/JPY (JPY=X) Trade optimism weighs on safe-haven assets

Japanese Yen: USD/JPY (JPY=X) Trade optimism weighs on safe-haven assets

The USD/JPY started the day below the 109 handle on Thursday and spent the Asian session in a calm manner but rose sharply during the European trading hours after China’s Commerce Ministry said that the United States and China have agreed to roll back tariffs.

Trade optimism weighs on safe-haven assets

With the risk-on flows continuing to dominate the market action during the American session, the pair preserved its bullish momentum and advanced to its highest level in more than five months at 109.48. As of writing, the pair was trading at 109.43, adding 0.4% on a daily basis.

Confirming the statement from China, citing a source familiar with talks, Bloomberg on Thursday reported that the US side recognized that the phase-one of the trade deal with China will include mutual reductions in import tariffs. Reflecting the strong risk appetite, the 10-year US Treasury bond yield surged to its highest level since early August and was last up 6.5% on the day. Additionally, Wall Street’s three main indexes are flirting with all-time highs.

On the other hand, the selling pressure surrounding the EUR and the GBP on Thursday allows the USD to find demand and causes the bullish momentum to remain intact. 

Leading Economic Index and Coincident Index data will be released from Japan on Friday but the risk perception is likely to continue to impact the pair’s movements. Wholesale Inventories and the University of Michigan’s Consumer Confidence Index will be featured in the US economic docket.

Technical Indicators 

Overall, the bias in prices is: Upwards.

The projected upper bound is: 110.27.

The projected lower bound is: 108.34.

The projected closing price is: 109.31.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 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 85.4214. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 61.86. 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 62 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 121.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 3 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 0 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.290 at 109.250. Volume was 19% above average (neutral) and Bollinger Bands were 52% narrower than normal.

Open     High      Low     Close     Volume___
108.960 109.480 108.640 109.250 107,760
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 108.74 107.91 109.03
Volatility: 6 6 7
Volume: 83,489 91,074 90,740

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% 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 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 19 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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