USDJPY Outlook: Correction on oversold studies to precede fresh weakness

Slobodan Drvenica Windsor Brokers

USDJPY

The pair bounces from one-month low on Tuesday, as selloff in global stock markets eased, reducing safe-haven demand. Japanese yen advanced in past two weeks on strong fall in stock markets as well as uncertainty over US/China trade war, which boosted its safe-haven appeal. Bounce comes after larger bears were contained by rising 55SMA and strongly oversold daily studies warned of correction. Reversing slow stochastic and momentum support the action, but overall structure remains firmly bearish and favors further weakness after correction. Repeated close below Fibo support at 111.97 (61.8% of 110.38/114.54) and final break below 55SMA are needed to signal bearish continuation towards 111.32/00 (100SMA/round-figure). Monday's high at 112.23 marks initial resistance with extended upticks to be ideally capped by 30SMA (112.45). Lift above 20SMA (112.95) would neutralize bears and signal reversal.

Res: 112.23; 112.45; 112.95; 113.08
Sup: 111.82; 111.62; 111.32; 111.00

Interested in USDJPY technicals? Check out the key levels

1. R3 112.78
2. R2 112.52
3. R1 112.15
PP 111.88
1. S1 111.51
2. S2 111.25
3. S3 110.88

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: US Dollar to remain pressured until uncertainty fog dissipates

Unimpressive European Central Bank left monetary policy unchanged for the fifth consecutive meeting. The United States first-tier employment and inflation data is scheduled for the second week of February. EUR/USD battles to remain afloat above 1.1800, sellers moving to the sidelines.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold: Volatility persists in commodity space

After losing more than 8% to end the previous week, Gold remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000. The US economic calendar will feature Nonfarm Payrolls and Consumer Price Index data for January, which could influence the market pricing of the Federal Reserve’s policy outlook and impact Gold’s performance.

Week ahead: US NFP and CPI data to shake Fed cut bets, Japan election looms

US NFP and CPI data awaited after Warsh’s nomination as Fed chief. Yen traders lock gaze on Sunday’s snap election. UK and Eurozone Q4 GDP data also on the agenda. China CPI and PPI could reveal more weakness in domestic demand.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.