USD/JPY Tests 150 Break, 200-DMA, 151.95 Overhead
USD/JPY Talking Points:
- It was a little over a month ago that the market seemed very bearish on USD/JPY despite the stalling showing around the 140.00 level.
- The week of the FOMC rate cut, USD/JPY opened with a failed breakout at 140.00, followed by the initial build of higher-lows to go along with RSI divergence. Now a month and 1,000 pips later, the mood seems very bullish in the pair despite the expectation for the Fed to continue cutting rates through the end of next year.
- I look into USD/JPY from both short and long-term perspectives in the Tuesday webinar each week, which you’re welcome to join: Click here for registration information.
USD/JPY had showed defense of the 150.00 level last week as sellers came in before a test at that level a week ago. By Thursday, bulls were willing to take the chance, but their gambit was short-lived, as prices dipped again on Friday to close the week below the big figure. Even after this week’s open, prices held below 150.00.
It was after this morning’s US open that the pair started to show strength above the big figure, and that move has largely continued since.
At this point, the pair is fast approaching the Fibonacci level at 150.77, which is the 50% mark of the July-September sell-off in the pair. Above that is the 200-day moving average, which currently projects to around 151.30. And above that is a major level at 151.95, which has held the highs for each of the past two years in USD/JPY.
For bullish continuation, chasing could be challenging giving proximity to that resistance and just how entrenched the short-term move has become. There are prior price swings at 150.30 and 150.10 that could be of interest for continuation scenarios.
USD/JPY Hourly Price Chart
USD/JPY Prices Driving Narrative
It was just a little over a month ago that sentiment around USD/JPY seemed really bearish. With the Fed expected to push heavy into a cutting posture, the pair opened the week of the FOMC rate decision with a test below the 140.00 level. Even before that, the bearish move had started to show signs of stall, first with a case of RSI divergence before a big zone of support came into play shortly after.
But that failed as sellers dried up and prices started to bounce. A higher-low showed shortly after, with another after the actual FOMC rate cut announcement and that’s around the time that bulls started to take back over in USD/JPY.
A month later, longer-dated US yields are surging, and many are proclaiming the return of the carry trade. Perhaps that’s true but at this point, markets are still expecting the Fed to cut heavily through the end of next year, with 150 bps of rate cuts priced-in through the end of next year.
But as I’ve been pointing out in these articles around USD/JPY for more than a month – fundamentals are not a direct push-point for price. Price is driven by buyers and sellers and while there can share a relationship between fundamental and headline flow, that’s not always the case. And at this point the concern with the long side of USD/JPY is re-test of the same price that turned around the pair back in Q4 of 2022 and 2023. That’s at 151.95, and it sits just overhead.
Before that comes into play, there’s a couple of other areas of interest, such as the 200-day moving average that currently plots around 151.30; along with the 50% mark of the sell-off at 150.77.
USD/JPY Daily Price Chart
--- written by James Stanley, Senior Strategist
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.
ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.
City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.
The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.
The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.
The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.
StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
© City Index 2024