USD/JPY ANALYSIS
JAPANESE YEN FUNDAMENTAL BACKDROP
The Yen has been steadily depreciating towards the U.S. Greenback since late April 2021, because the dollar continues to climb on the again of favorable elementary components. This makes the Yen one of many worst performing currencies towards the greenback year-to-date (see comparability chart beneath).
Supply: Reuters
USD/JPY has additionally been reacting to the current rise in treasury yields which is exhibiting resolve in its persistent grind larger. With the Yen being probably the most correlated G10 forex to U.S. treasury yields, that is all the time a key metric to contemplate when analyzing JPY pairs.
USD/JPY ECONOMIC CALENDAR
Earlier this week Japanese unemployment knowledge was worse than expectations (2.8%) as precise figures printed at 3% which supplemented the JPY decline. The remainder of the week is firmly fixated on U.S. PMI knowledge in addition to Friday’s Non-Farm Payrolls (NFP). Each units of knowledge have held important affect over monetary markets this 12 months however after a lot speak across the significance of sustained optimistic jobs knowledge, any deviation from estimates could lead to massive value swings on the USD/JPY pair. Correct danger administration ought to be integrated on all open positions as a rise in volatility pre and post-NFP is anticipated.
Supply: Refinitiv
USD/JPY TECHNICAL ANALYSIS
USD/JPY Weekly Chart:
Chart ready by Warren Venketas, IG
The long-term trendline resistance (black) on the weekly USD/JPY chart has been breached this week however will solely be confirmed as a breakout ought to the weekly candle shut above resistance. With upcoming financial bulletins, there should be room for a pullback throughout the resistance zone.
The Relative Power Index (RSI) signifies potential bearish divergence as USD/JPY pushes larger whereas the RSI reveals slowing bullish momentum. Divergence merely refers back to the opposing motion between value motion and the RSI.
USD/JPY Day by day Chart:
Chart ready by Warren Venketas, IG
Fixing in on the each day chart we discover greenback bulls pushing towards the March 2020 swing excessive at 111.71 after the 111.00 psychological breach. Ought to the swing excessive be cleared, the 50% Fibonacci resistance zone at 112.42 will function a subsequent goal.
From the bearish perspective, the 111.00 key degree will present preliminary help. The each day RSI echoes the weekly RSI with the March 2021 excessive printing larger than present ranges – bearish divergence.
IG CLIENT SENTIMENT DOES NOT FAVOR BULLS NOR BEARS
IGCS reveals retail merchants are at the moment web quick on USD/JPY, with 60% of merchants at the moment holding quick positions (as of this writing) nonetheless, merchants are additional net-long than yesterday and final week, and the mix of present sentiment and up to date modifications offers us a combined bias.
— Written by Warren Venketas for DailyFX.com
Contact and observe Warren on Twitter: @WVenketas
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