USD/JPY ANALYSIS
JAPANESE YEN FUNDAMENTAL BACKDROP
2021 has not been an outstanding 12 months for the Yen towards the U.S. Greenback, however current COVID-19 considerations relating to the Delta variant has given USD/JPY bears some hope (see chart under). The correlation between COVID-19 considerations as new circumstances (world) rise and Yen energy is sort of evident from the chart. Ought to new circumstances proceed to rise, we might see subsequent Yen energy.
Supply: Refinitiv
USD/JPY OPTION EXPIRY LATER TODAY
The under possibility expiry strikes might play a major position at this time as traders might maintain costs above the 110.00 stage to shut off positions in-the-money. As a common rule of thumb, when giant possibility positions expire, costs have a tendency to maneuver within the route of that particular strike.
FX choices expire 10-am New York/3-pm London – Wednesday July 21
USD/JPY: 110.00-15 (1BLN), 110.50 (820M)
Supply: Reuters
USD/JPY TECHNICAL ANALYSIS
USD/JPY Weekly Chart:
Chart ready by Warren Venketas, IG
Worth motion has proven a pullback from 2021 highs in late June. This falls in step with the rising new COVID-19 circumstances as talked about above. The retreat again under the long-term trendline resistance zone (black) might recommend further Yen energy towards the 109.00 psychological stage.
Each the MACD indicator and Relative Power Index (RSI) present bearish indicators as highlighted in pink and blue respectively. The RSI reveals bearish divergence as costs enhance whereas slowing upside momentum is mirrored on the oscillator. Continuation of the current pullback might ensue within the medium-term ought to COVID-19 proceed on its present trajectory.
USD/JPY Day by day Chart:
Chart ready by Warren Venketas, IG
After the break under the help trendline (yellow) in early July, USD/JPY bulls haven’t been capable of push again towards the reversal. Sustaining costs above 110.00 has been a wrestle however with todays choices expiries, it’s attainable this can be the case main as much as expiry. Publish-expiry there could also be a transfer downward towards the 38.2% Fibonacci stage at 109.25 – Fibonacci taken from June 2015 excessive to June 2016 low.
From the bullish perspective, the current swing excessive at 110.70 will function preliminary resistance nonetheless, this can be unlikely with the present elementary backdrop.
IG CLIENT SENTIMENT INDICATING SHORT-TERM UPSIDE
IGCS reveals retail merchants are presently internet quick on USD/JPY, with 53% of merchants presently holding quick positions (as of this writing) and since we take a contrarian view at DailyFX, the suggestive bias is bullish.
— Written by Warren Venketas for DailyFX.com
Contact and comply with Warren on Twitter: @WVenketas
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