USD/JPY Outlook: Safe haven yen extends fall as fears of conflict escalations fade

Slobodan Drvenica Windsor Brokers

USD/JPY

The pair maintains firm bullish tone on Thursday and extends strong rally from the previous day, hitting the highest levels in past seven days and cracking key Fibo barrier at 109.36 (61.8% of larger 112.40/104.44 fall).
Iran's rocket attack at US targets on Wednesday sparked safe-haven demand that pushed the pair to the lowest since early October, but dip proved to be short-lived.
Subsequent rally on calming geopolitical situation marked the biggest one-day advance since August and left long-tailed daily bullish candle which underpins the action. Also, completion of bear-trap pattern on daily chart, was bullish signal that was reinforced by close well above the top of thick daily cloud (spanned between 108.10 and 108.90) and close above a cluster of daily MA's (10;55;30;20).
Early Thursday's action holds comfortably above 109 handle and eyes recent highs at 109.70 zone (reinforced by converged 200/100WMA's), violation of which would spark fresh extension of larger uptrend from 104.44 (2019 low, posted on 26 Aug).
North-heading daily momentum approaches the border of positive territory and eventual break would provide fresh bullish signal, as RSI and stochastic are also trending higher. Broken Fibo barrier (76.4% of 109.68/107.65) at 109.20 and diverging 20/30DMA's (109.09/04) mark initial supports, guarding daily cloud top (108.90, reinforced by broken Fibo 61.8% and 55DMA) which is required to contain corrective dips and keep bulls intact.

Res: 109.37; 109.47; 109.70; 110.00
Sup: 109.20; 109.04; 108.90; 108.62

Interested in USD/JPY technicals? Check out the key levels

1. R3 111.24
2. R2 110.24
3. R1 109.64
PP 108.64
1. S1 108.04
2. S2 107.05
3. S3 106.44

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

EUR/USD looks weak below 1.1800

EUR/USD has slipped back under pressure, breaking through the 1.1800 support and drifting towards the weekly lows near 1.1770 ahead of the opening bell in Asia. The move reflects renewed strength in the US Dollar, with steady geopolitical tensions keeping its demand firm. Moving forward, the release of the German labour market report and flash inflation figures should keep European investors entertained on Friday.

GBP/USD threatens the 200-day SMA near 1.3440

GBP/USD rapidly leaves behind Wednesday’s strong advance, coming under heavy pressure and retesting the 1.3440 zone, where the critical 200-day SMA is located. Cable’s deep pullback follows the strong gains in the Greenback, while investors continue to pencil in a potential BoE rate cut in March.

Gold trims gains, slips back to around $5,170

Gold is now facing some downside pressure, hovering around the $5,170 region on Thursday. The yellow metal surrenders part of its earlier gains on the back of the resurgence of the buying interest in the Greenback. In the meantime, geopolitical tensions in the Middle East continue to limit the downside potential for now.