Richard Perry
Independent Analyst
USD/JPY
There has been a real move back into safety after a significant scaling back of expectations over “phase one” deliverability. This has really driven flow into the yen and pulled Dollar/Yen sharply lower in recent days. Another uptrend breach of the rally from August (arguably the third now) leaves the bulls once more in a difficult position. Is this an unwind, or a deeper correction? Whilst the higher low at 108.25 remains intact, then the bulls will still have a degree of control. For now, momentum indicators are simply unwinding within their medium term positive configurations. However, watch out for the RSI below 40, and MACD lines below neutral for a shift in this. It seems as though the bulls are less secure now and if this were to come with a confirmed breach of 108.25 then it would be a corrective signal. What was notable during yesterday’s breakdown, was the market initially holding on to 109.00 but then in the wake of Trump’s comments at the NATO summit there was a key shift in sentiment. It means that resistance is now in place at 109.00/109.20. There is an element of consolidation early this morning, but a breach of 108.25 opens 107.85 but also completes a mini top pattern to imply around 150 pips of further downside towards 106.75.
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