USD/JPY, AUD/JPY, CAD/JPY Charts & Extra

JAPANESE YEN FORECAST: USD/JPY, AUD/JPY, CAD/JPY – CHARTS TO WATCH

• USD/JPY value motion could also be on the cusp of one other leg decrease as Treasury yields break down
• AUD/JPY goals for recent 2020 highs with the Aussie-Yen buoyed by upbeat market sentiment
• CAD/JPY might achieve floor with crude oil costs trying to push greater

The Japanese Yen has traded sideways in big selection over the past a number of weeks judging by the JXY Index. On the floor, this seems owed to a latest consolidation in spot USD/JPY even because the US Greenback implodes. Wanting past USD/JPY efficiency, nevertheless, a story underscoring broader Japanese Yen weak point emerges.

This largely follows sustained promoting stress throughout safe-haven currencies, just like the Yen, as investor sentiment and danger urge for food proceed to enhance. That mentioned, what would possibly steer the course of JPY value motion going ahead?

USD/JPY PRICE CHART: DOLLAR-YEN TRACKING TEN YEAR TREASURY YIELD SPREAD OVER JAPANESE GOVERNMENT BONDS

Chart created by @RichDvorakFX with TradingView

USD/JPY has drifted horizontally inside a 3.5% buying and selling vary for the reason that starting of April. The rate of interest delicate Greenback-Yen has confronted bearish headwinds extra not too long ago as spot costs edge again towards month-to-month lows notched in Could and June. Maybe the 10-year yield unfold between US Treasuries and Japanese Authorities Bonds serves as one attainable driver steering USD/JPY value motion decrease.

Assuming this direct relationship is maintained, it seems like there may be potential for the Japanese Yen to realize floor towards the US Greenback. That is contemplating the newest drop within the 10-12 months Treasury yield under 60-basis factors, which helped the yield unfold between USTs and JBGs decline.

AUD/JPY PRICE CHART: AUSSIE-YEN MIRRORING VIX INDEX ‘FEAR-GAUGE’

Chart created by @RichDvorakFX with TradingView

After surging an eye-popping 27% off the coronavirus backside, the Aussie-Yen is presently urgent recent 2020 highs across the 76.500-price stage and is now optimistic year-to-date. The unimaginable v-shaped restoration staged by sentiment-linked AUD/JPY for the reason that mid-March trough seems underpinned by a pointy enchancment in danger urge for food. That is highlighted by the robust unfavorable correlation that AUD/JPY value motion tends to carry with the S&P 500 VIX Index.

Correspondingly, the Japanese Yen would possibly stay beneath stress with the VIX ‘fear-gauge’ sinking towards pre-pandemic ranges as traders proceed to low cost, and seemingly ignore, a number of elementary threats nonetheless confronted by the worldwide economic system. That mentioned, an abrupt return of danger aversion seemingly stands to ship the VIX Index snapping greater and might be mirrored by the Aussie-Yen pivoting decrease.

CAD/JPY PRICE CHART: CANADIAN DOLLAR EDGING HIGHER AGAINST YEN AS CRUDE OIL CLIMBS

Chart created by @RichDvorakFX with TradingView

Along with the VIX Index, the course of crude oil would possibly function one other quantitative bellwether with potential of signaling the place the Japanese Yen would possibly head subsequent. That is notably the case for CAD/JPY value motion because the Loonie eyes oil whereas the Yen responds to fluctuations in danger urge for food fueled by modifications in expectations for international GDP progress.

Upward momentum loved by crude oil costs seemingly signifies that market contributors stay assured about prospects for financial progress and oil demand. If this advance is sustained, it’s attainable that CAD/JPY could proceed climbing as nicely. Conversely, the Japanese Yen might try and claw again good points forfeited again to the Canadian Greenback if crude oil slumps.

— Written by Wealthy Dvorak, Analyst for DailyFX.com

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