Japanese Yen: USD/JPY (JPY=X) Traders Waiting for BOJ to Make Its Move

Japanese Yen: USD/JPY (JPY=X) Traders Waiting for BOJ to Make Its Move

Japanese Yen: USD/JPY (JPY=X) Traders Waiting for BOJ to Make Its Move

The Dollar/Yen is trading slightly higher on Wednesday after reversing earlier losses. The move is being fueled by a pick-up in demand for higher risk assets, however, weaker Treasury yields are helping to cap gains.

Despite the turmoil in the markets, the response by Dollar/Yen investors this week has been nearly textbook with the Forex pair falling as support eroded for higher-yielding assets and yields plunged, and rallying on increased demand for risk and higher yields.

Daily Forecast

Continue to expect the USD/JPY to respond in the traditional way to the price action in U.S. equity and Treasury markets.

Fundamentally, investors will be influenced by the ADP Non-Farm Equipment Change and ISM Non-Manufacturing PMI reports.

The ADP data is expected to show the private sector of the economy added 170K jobs in February. A lower number should be bearish for the Dollar/Yen. However, losses could be limited because the Fed already cut rates to fight a weakening economy.

The ISM Non-manufacturing PMI report is expected to come in at 54.9. A lower number will signal that the coronavirus outbreak has already had an impact on the U.S. services industry. A move under 50.0 will indicate a contraction in the sector.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 109.28.

The projected upper bound is: 108.84.

The projected lower bound is: 105.86.

The projected closing price is: 107.35.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 25 black candles for a net of 2 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 18.0945. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 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 34.57. 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 sell 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 -146.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 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 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed up 0.270 at 107.390. Volume was 15% above average (neutral) and Bollinger Bands were 149% wider than normal.

Open     High      Low     Close     Volume___
107.120 107.680 106.840 107.390 97,349
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 109.54 109.46 108.37
Volatility: 12 9 7
Volume: 121,593 88,139 88,349

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 0.9% 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 3 periods.

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