Chart Of The Week: USD/JPY moves in on familiar price acceptance area

Risk-off flows not supporting yen, bulls in control seeking out the 114 handle.
Symmetrical Triangle breaking down to the upside, eyes on 112.50s.
Resistance levels to hold in near-term, ahead of low volume nodes.

Ross J Burland FXStreet

The 2015-2020 downtrend has been taken put and bulls are controlling with a weekly close above 110.31. Bulls can target a run beyond 112.50s for a move towards 114.55, 2018 high.

USD/JPY monthly chart: Symmetrical Triangle

Characterized by two converging trend lines connecting a series of sequential peaks and troughs, the symmetrical triangle (ST) could lead to an extensive breakout, one way or the other, although a critical level of resistance at this juncture will need to give in. We have been here before and 112.50/113.00 has been a high area of acceptance by the bulls and bears, so we could see a period of consolidation prior to extensive gains towards the 114 handle.

Break-out may struggle through two key resistance areas

The 61.8% Fibonacci has been priced and the price is now testing the ST's resistance. Resistance 1 on the chart may lead to a head fake on initial attempts beyond the resistance and then the 112 handle. Resistance 2 will likely hold numerous attempts through the 114.55, 2018 high.

Bulls to target low volume nodes

As far fetched as it may seem, the reality is that the yen correlation to risk-off has been dismantled in recent sessions. Gold has rallied some 6.5% vs the US dollar yet the yen has dropped 3.6% in the same time frame. The coronavirus and economic impact it is seen to have in Asia is the likely reason for an exodus from the yen. On such a foundation, it is more feasible to see USD/JPY rally and should it breach the Resistance 2 on the chart above, according to historic price action, there would appear to be little resistance towards a 138.2% and 116.8% levels, the 'Key Objective' area marked out on the chart above.

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

GBP/USD bounces off four-day lows, still below 1.3500

GBP/USD sticks to the bearish tone on Thursday, coming down to the 1.3480 region in the latter part of the NA session. In the meantime, Cable’s weakness comes as investors continue to assess mixed UK data, poor US results, and the persistent uncertainty surrounding the US-Iran conflict.

EUR/USD looks apathetic around 1.1530

EUR/USD reverses Wednesday’s downtick and trades with modest gains in the 1.1530 region following the end of the NA session on Thursday. The pair’s tepid advance comes on the back of the absence of clear direction in the US Dollar despite tensions from the Middle East appear far from alleviated. Later on Friday, investors are expected to monitor the the releases of another revision of GDP figures in the Euroland, US Retail Sales and the preliminary U-Mich gauge.

Gold remains on the defensive below $4,350; downside seems cushioned

Gold trades below $4,350 during the Asian session on Friday and looks to extend the previous day's pullback from the highest level since June 5 as the US-Iran standoff continues to underpin the US Dollar's reserve-currency status. However, reduced bets for an immediate Fed rate hike, amid signs of cooling US inflation, should act as a tailwind for the non-yielding bullion and help limit deeper losses.

Dogecoin reclaims $0.07 support as whales step in

Dogecoin (DOGE) edges above the daily open, trading above $0.070 as of Thursday. While this uptick offers a positive signal, DOGE continues to trade within a broader bearish context, down approximately 12% from its July peak of $0.079. Still, should the $0.070 support level hold, the mild recovery could gather pace, targeting resistance at $0.080 and potentially the key $0.100 threshold.

Why credit markets aren’t pricing $570B of AI debt

Forecasts put global artificial intelligence related debt issuance near $570 billion this year, with roughly $236 billion of it priced by the end of May at four times the prior year's pace. Data centre securitisation alone has gone from about $4 billion a year through 2022 to roughly $10 billion in each of 2023 and 2024, and then $27 billion in 2025.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.