Japanese Yen: USD/JPY (JPY=X) traders will also be taking direction from the movement in Treasury yields

Japanese Yen: USD/JPY (JPY=X) traders will also be taking direction from the movement in Treasury yields

Japanese Yen: USD/JPY (JPY=X) traders will also be taking direction from the movement in Treasury yields

The Dollar/Yen is trading lower on Thursday, shortly before the U.S. opening and the release of a slew of economic reports including the ISM Non-Manufacturing PMI report for September. Weaker-than-expected U.S. economic reports earlier in the week renewed fears over a U.S. recession, sending investors into the safety of the Japanese Yen.

Falling U.S. Treasury yields and a plunge in global equity markets are also driving investors into the Japanese Yen.

The USD/JPY reached its high of the week on Tuesday when data showed a sharp decline in US factory activity. The selling continued on Wednesday after data showed hiring by U.S. private employers had slowed in September. Both reports indicate that the trade war between the United States and China is taking its toll on the U.S. economy.

The tightening of the spread between U.S. Government bond yields and Japanese Government bond yields is also making the Japanese Yen a more desirable asset.

The U.S. Dollar is being driven lower by the drop in Treasury yields. On Wednesday, Treasury yields fell as employment figures showed the U.S. economy is headed for a slowdown.

As of Wednesday’s close, traders were pricing in a 75% chance of a Fed rate cut at its October 29-30 policy meeting. This is up from 62% on Tuesday and about 20% last Friday. The Dollar/Yen could continue to weaken until traders have fully priced-in a 25-basis point rate cut.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 107.83.

The projected upper bound is: 108.29.

The projected lower bound is: 105.38.

The projected closing price is: 106.83.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 26.5306. This is not an overbought or oversold reading. The last signal was a sell 2 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 43.48. 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 37 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 -187.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 10 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 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX JPY= closed down -0.300 at 106.870. Volume was 6% below average (neutral) and Bollinger Bands were 33% narrower than normal.

Open     High      Low     Close     Volume___
107.170 107.290 106.470 106.870 85,242
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 107.55 107.01 109.11
Volatility: 7 9 7
Volume: 89,417 94,333 91,514

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 2.1% below 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 19 periods.

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