USD/JPY Forecast Video for 17.07.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially broken down a bit during the trading session on Friday, only to turn around and show signs of life again at the crucial ¥138 level. The ¥138 level is an area that had previously been resistance and the top of the overall sending triangle. Looking at this chart, it seems like market memory came back into the picture to turn things around and rally toward the 50-Day EMA. It’s also worth noting that the market is at the bottom of the overall bullish flag that I had marked on the chart, and therefore a lot of market memory is sitting in this area, perhaps willing to offer a bit of support.

If the market were to break down below the bottom of the candlestick on Friday, then it’s possible that we could see the US dollar drop down to the 200-Day EMA, closer to the ¥136.50 level. That being said, I think it’s probably unlikely to see that happen, because the market had fallen so hard. All things being equal, this is a scenario where we are seeing a lot of market memory come into the picture and therefore we could see a potential trade set up. If we can break above the 50-Day EMA we would have a bit of confirmation, but some traders will be jumping into this market as it takes out the top of an inverted candlestick from the previous session.

Keep in mind that the interest-rate differential continues to be very wide, and therefore we probably have further upward momentum over the longer term. Recently, the Bank of Japan has suggested that they were going to tweak yield curve control, so that has been part of the ranch and that we have seen. That being said, the inflation numbers have also come in a little cooler than anticipated recently, at least in the United States, so that has had an effect on the US dollar. In general, this is a situation where I think traders are trying to come back in and pick up “cheap US dollars”, or at least take profit in the Japanese yen, which of course has been like a punching bag for quite some time.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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USD/JPY Forecast Video for 19.04.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar pulled back to reach toward the 200-Day EMA, which of course is an indicator that a lot of people pay attention to. Because of this, it’s probably worth noting that there should be a lot of noise in this area and of course support. I do think that the market is trying to turn around and rally over the longer term, but right now it’s more likely than not going to be a scenario where we will eventually find buyers, but the question will be when do they show up?

Ultimately, the 50-Day EMA sits underneath and is starting to rise, so that does offer the ability to see a bit of support in that area as well. Ultimately, this is a market that could go reaching toward the ¥135 level. The market breaking above the ¥135 level opens up the possibility of the ¥137.50 level, which is where the market has seen a lot of selling pressure previously. Because of this, I think it’s likely that we would see that area as a potential ceiling in the market, and therefore you would have to be cautious trying to get long in that area. However, if we were to break above there then it would obviously be a very bullish sign and could send the market racing higher. In that environment, I would fully anticipate that the market is looking to reach the ¥140 level.

Keep an eye on the bond markets of both countries, as the interest rate differential has a huge part to play in this market. You should also keep in mind that the Bank of Japan continues to have a major yield curve control policy and effect, and therefore will have to print currency if rates start to rise again, devaluing the Japanese yen itself. In that scenario, we could see the US dollar, and most other currencies, take off against the Japanese yen if yield start to rise again. Underneath, I would anticipate that the ¥130 level should be rather supportive, and to break down below there could open up the possibility of a move to the ¥127.50 level.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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The US dollar fell significantly during the Friday session against the Japanese yen, slicing below the 111.50 level. Because of this, the market then fell towards the 111 handle, which of course has a certain amount of psychological significance. However, I believe that the real support is probably closer to the 110 handle, so rallies of this point in time should be and I selling opportunity. The 110 level will be massively supportive as it is a large, round, psychologically significant number, but given enough time I think that we do need to test the that area first. This pair does tend to be somewhat risk sensitive, but I think a lot of this comes down to what the Federal Reserve is doing.

Federal Reserve expectations

From traders around the world, they are starting to expect the Federal Reserve to be very slow to raise interest rates. Janet Yellen does a lot to boost that case as she spoke in front of Congress recently, suggesting that perhaps things would be data dependent yet again, but if the Federal Reserve looks likely to hike rates just as quickly as once thought, that will turn this market around completely. It looks to me as if the 110 level is an excellent area to find support, so I would anticipate a bit of bullish pressure in that area, and that will be supercharged by any statements coming out of her or major players coming out of the Federal Reserve. I think that the market is probably going to be bearish for the next several sessions, but the downward pressure is probably somewhat limited as far as where it can go. If we break down below the 109 level, then I think we fall apart completely.

This article was originally posted on FX Empire

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US Dollar vs Japanese Yen Weekly Technical Analysis

The US dollar initially tried to rally a bit during the course of the week, but then broke down rather significantly to reach the ¥152 level. That being said, this is a market that is now retesting the previous resistance barrier. And from a technical analysis standpoint, this is a perfect entry point.

We will have to see whether or not the market holds burnt. I think we may have a situation where those who look at the bigger picture realize that the Bank of Japan can only do so much, and it is possible that this is just simply the beginning of the next leg higher. On the contrary, if we were to break down below the ¥150 level, then that would obviously be a very negative turn of events.

But we are literally at the top of a previous ascending triangle that measures for a move of about 20 handles. I mean, we’re talking a long term structural move to somewhere around ¥175. In general, this is going to continue to be a market that pays you via swap. And quite frankly, the Bank of Japan would have to raise its rates and the Federal Reserve would have to collapse rates, not cut them, but collapse them to change that attitude and that fact.

So with that being said, this is still a market that I’m bullish on. I just want to let the market lead the way, and I will simply jump in at that point in time. However, I prefer to “scale into the position” whenever I can, as the volatility is going to continue to be a headache overall.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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GBP/JPY Forecast Video for 14.03.23

British Pound vs Japanese Yen Technical Analysis

The British pound has gotten significantly sold off during the trading session on Monday, to reach down toward the ¥160 level. If we break down below the ¥160 level, then it’s likely that the market goes looking to the ¥157.50 level, where we had seen significant support previously.

Keep in mind that the market is very sensitive to risk appetite, and of course the interest rate market as the Bank of Japan continues to defend the 50 basis point level in the 10 year yield. Ultimately, I think this is a situation where you’ve got more noise than anything else, but the ¥160 level could offer a little bit of support.

All things being equal, the risk appetite has been all over the place as of late, and therefore you see a lot of choppy behavior in this market. To the upside, if we were to take out the ¥162.50 level, then it’s possible that we could go to the ¥165 level after that. Breaking above that level would open up the possibility of a move to the ¥167.50 level, where we had seen some selling pressure previously.

At this point, you will probably continue to see more back-and-forth behavior than anything else, and now that we have seen a very nasty candlestick on Monday, a lot of traders will probably start taking a look at the upside and try to return back to the same range that we have been chopping around for what seems like a lifetime, going back roughly a year. With this being the case, I’ll be looking for supportive candles that I can start buying but I will also be very patient.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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According to economists at Danske Bank, the Bank of England (BoE) is anticipated to maintain the Bank Rate at 5.25% on May 9, setting the stage for forthcoming rate cuts.

Analysts expect a dovish stance from the Monetary Policy Committee (MPC), with the first 25bp cut projected in June.

Speculation indicates a cautious tone, potentially driving EUR/GBP higher (and therefore GBP/EUR lower) due to a dovish vote split and a revised inflation outlook.

In their base scenario, analysts predict EUR/GBP to close higher, attributing it to a dovish vote split, revised inflation forecast, and cautious remarks during the press conference.

They view Pound Sterling unfavourably against relative rates, suggesting selling GBP at current levels.

Their latest EUR/GBP forecast projects the Euro at approximately 0.89 against the British Pound within 6-12 months

Key Quotes:

“Overall, we expect the MPC to soften its communication, priming the markets for an imminent start to a cutting cycle. We expect the first 25bp cut in June.”
“Since the last monetary policy decision in March, data has overall been slightly stronger than expected. Both headline and service inflation are slightly above the MPC’s forecast from February and wage growth is likely to overshoot the Q1 forecast of 5.7%.”

“Ramsden, who early in the hiking cycle was a hawkish dissenter, recently struck a dovish tone noting that ‘the balance of domestic risks to the outlook for UK inflation … is now tilted to the downside’.”
“We expect the BoE to prime markets for a rate cut at the meeting next week delivering the first cut of 25bp in June. We expect a 25bp cut in each of the subsequent quarters, totalling 75bp of rate cuts for 2024.”

“In our base case we expect EUR/GBP to end the day higher on the back of a dovish vote split and remarks as well as a downward revision to the inflation forecast in the medium term.”

“We expect this to be cautiously reemphasised during the press conference.

“Overall, we see relative rates as a negative for GBP and see current levels as attractive levels to sell GBP. ”

“We forecast EUR/GBP towards 0.89 in 6-12 months.”

The U.S. dollar, as tracked by the DXY index, retreated sharply this past week, briefly reaching its lowest point since April 10th. This selloff stemmed primarily from falling U.S. Treasury yields following the Federal Reserve’s monetary policy announcement and weaker-than-anticipated U.S. employment numbers. Ultimately, the DXY dropped nearly 1%, settling just above the 105.00 mark.

US DOLLAR INDEX WEEKLY PERFORMANCE

US Dollar (DXY) Chart Created Using TradingView

Initially, the greenback’s decline was triggered by Fed Chair Powell’s dovish remark at the central bank’s last meeting, indicating that a rate cut is still likely to be the next policy move despite rising inflation risks. Subsequently, the US non-farm payrolls report, which revealed an unexpected cooling in job creation accompanied by softer wage pressures, further reinforced the currency’s downward reversal.

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Looking ahead, the prospect of Fed easing irrespective of conditions, coupled with increasing signs of economic fragility reflected in recent data, should prevent bond yields from heading higher, removing from the equation a bullish catalyst that has benefited the U.S. dollar this year. This could lead to further weakness in the short term, at least during the first part of the month.

The upcoming week offers a relatively quiet U.S. economic calendar, allowing recent FX moves time to consolidate. However, the near-term outlook will need to be reassessed in mid-May, when the next set of CPI figures will be released. This report will provide fresh insights into the current inflation landscape, thereby guiding the Fed’s policy path and the direction of the broader market.

Wondering about EUR/USD’s medium-term prospects? Gain clarity with our Q2 forecast. Download it now!

EUR/USD FORECAST – TECHNICAL ANALYSIS

EUR/USD rallied this past week, breaking above several resistance zones and coming within a hair’s breadth of breaching the 50-day and 200-day SMA. Bears need to keep prices below these technical indicators to contain upside momentum; failure to do so could spark a move toward trendline resistance at 1.0830. On further strength, attention will be on a key Fibonacci barrier near 1.0865.

In the event of a bearish reversal, minor support areas can be identified at 1.0750, 1.0725 and 1.0695 thereafter. Below these levels, all eyes will be on the week’s swing low around 1.0645, followed by April’s through around the psychological 1.0600 mark.

EUR/USD PRICE ACTION CHART

EUR/USD Chart Created Using TradingView

For a complete overview of the British pound’s technical and fundamental outlook, make sure to download our complimentary Q2 trading forecast now!

GBP/USD FORECAST – TECHNICAL ANALYSIS

GBP/USD also climbed this past week, but the advance lacked impulse, with prices failing to close above the 200-day simple moving average. Traders should keep a close eye on this indicator in the coming days, bearing in mind that a decisive breakout could pave the way for a retest of confluence resistance near 1.0620.

On the flip side, if sellers return and propel cable lower, support stretches from 1.2515 to 1.2500. Bulls need to keep prices above this range to mitigate the risk of escalating selling pressure, which could potentially steer the pair towards 1.2430. Subsequent declines from this point forward could bring into consideration the 1.2300 handle.

GBP/USD PRICE ACTION CHART

GBP/USD Chart Created Using TradingView

USD/JPY Forecast Video for 16.03.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has initially tried to rally during the trading session on Wednesday, to reach the ¥135 level. This is an area that has previously been resistance, and therefore the fact that we broke above that level would have been a very strong sign, but we have given back those gains to show signs of weakness since then. At this point, it looks like we are reaching down to the ¥132.50 level, an area that I think should end up being support. If we can break below there, then it’s likely that this market starts to fall toward the ¥130 level.

This all began with concerns with Credit Suisse, as Saudi financiers decided that they were no longer going to try to prop up the bank. Now we have to worry about contagion in the banking system, and as a result a lot of money flew into bond markets. Remember, the Bank of Japan is trying to fight higher interest rates right now, so therefore they have to step into the bond market and purchase those bonds with freshly printed in Japanese yen to keep the rates under 50 basis points on the 10 year. On the other hand, if rates start to drop around the world, then it’s likely that there is less pressure on the Bank of Japan, meaning that they will be buying less yen, and then meaning that the Japanese yen will strengthen, which is exactly what we see on this chart.

The more fear that we have out there, the more likely it is to be a situation where the Japanese yen gets a bit of a boost, and therefore as long as his fear is out there, we may see the Japanese yen be one of the better performing currencies. As soon as the market continues to see a lot of relief, then this market will turn right back around. That being said, these are very dangerous days so don’t be surprised at all that the market would be very volatile and noisy, so in this environment you need to keep your position size relatively small until you get confirmation of your position.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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USD/JPY Forecast Video for 14.02.23

US Dollar vs Japanese Yen Technical Analysis

The US dollar has rallied a bit during the trading session on Monday, as we have broken above the ¥132.50 level, and are now threatening the 50-Day EMA. Ultimately, this is a market that I think is going to continue to see plenty of bullish pressure, due to the fact that the Bank of Japan continues to have to fight interest rates rising, and therefore has to continue to print yen in a situation where the limit they are willing to accept on the 10 year yield is 50 basis points. In other words, if the market were to see higher interest rates again, then it’s very likely that we’ve got a situation where more yen will be printed, and it will continue to drive down the value of that currency.

That being said, every time interest rates drop a bit, that does help the yen and therefore could drive down the value of the market. Ultimately, this is about interest-rate differential and what’s going on with central banks around the world.

Looking at the chart, if we can clear the 50-Day EMA, then it’s likely that we would go looking to the 200-Day EMA, sitting near the ¥134.50 level. After that, we have a bit of a barrier at ¥135, but by the time we get there, I would suggest that the trend has gone back to being positive for the longer term. The market pulling back will probably see plenty of support near the ¥131.50 level, and then again at the ¥130 level. Whether or not we turn things around remains to be seen, but it certainly looks as if we could be threatening that move.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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The Euro to Pound Sterling forecast by analysts at Rabobank suggests the pair will decline from current levels, citing diverging views on BoE rate cuts.

BoE Chief Economist Pill warns of risks in easing too early, while EUR/GBP remains sensitive to rate cut speculation.

Recent UK CPI data was mixed, with a higher-than-expected headline rate.

Rabobank anticipates EUR/GBP to edge lower to 0.84 due to rate differentials.

Despite GBP’s recent performance, its resilience reflects past weakness. Radical fiscal policy changes seem unlikely due to UK public finances.

Key Quotes:

“In the year to date, the pound is the second best performing G10 currency after the USD.”

“Last year the GBP was also the second best performing G10 currency, after the CHF.”

“Despite this, the pound remains below its long-term averages against both the EUR and the USD.”

“We expect that EUR/GBP can edge lower to the 0.84 level on a 6-month view largely on the back of rate differentials.”

“This assumes little reaction to the UK election which is expected late in the year.”

“In view of the strained position of UK public finances, there would appear to be little room for radical changes to fiscal policy.”