Yen crosses update – Yen remains bid

AUDJPY and USDJPY

Yen crosses have remained heavy with the Japanese currency remaining buoyed by safe have demand as the global stock rout took another turn lower today in Asia. The biggest mover has been the high beta AUDJPY cross, which is presently showing a 1.3% decline on the day and trading at one-month lows.

News that Canada has arrested Huawei CFO drove underperformance in Hong Kong stocks, with the Hang Seng diving over 3%, seemed to have provided a broader selling cue on Asian bourses with investors still fretting about the potential recessionary signal of the recent inversion at the short end of the US yield curve. Taiwan’s central bank governor also said that US-China war may last 1-2 years, which chimed with a theme in market narratives that both sides remain on different page in their trade dispute, despite officials having sounded out positive mood music. Also in the mix is the drop in the US 10-year T-note yield, back below 3%.

YEN crosses – Technicals

AUDJPYcarved out a 16-day nadir at 81.27.  AUDJPY is the biggest mover with 1%-plus loss today. On Monday, we discussed for a temporary rally of the high beta currency based on risk-on sentiment and that the overall weakness of Aussie has not faded yet. Hence that is proven for a 4th day in a row, with Aussie being the biggest loser so far today. AUDJPY entered earlier Support area at 81-81.23, which reflects to a significant level this year as it provided support to the pair between April-July and also in November. Intraday, the extending Bollinger Bands pattern to the downside along with large bearish candles and the momentum indicators configurated negatively, suggest the continuation of the asset to the downside. The same negative picture holds in the medium term as well. A significant leg below this area, would add further negative pressure to the pair, with bears possibly dragging the AUDJPY to medium-term Supports at 79.90-80.00 and the 79.50.

In case the market rebounds away fro, 81.00 level, only a decisive move above 20-day SMA but more precisely the week’s midpoint at 82.50, could pick up hopes to the upside again.

USDJPY

has remained just above recent lows. USDJPY posted an intraday low at 112.58, coming within 1 pip of yesterday’s 16-day low. As stated on November 28 post: “So far today, the pair remains above 113.70, retesting the upper line of the triangle formed since October. The retest of the upper line traditionally alerts to the potential reversal of the price……a reversal to yesterday’s low and just a breath above 20-day SMA, could turn the outlook to a negative one again. In this case the doors towards 112 area open again.” – The descending triangle was once again confirmed, as we have seen the pair reversing to the downside from triangle’s upper-line, on November 28 and on Monday as well, and reaching the 112 area , as mentioned in our post.

Currently, the USDJPY, retested for the 3rd consecutive day the lower line of the triangle, suggesting that this line supports the pair strongly, the past 2 months. Hence as today, there is a raise of negative momentum, with bears pushing the asset lower, we could see within the day the break of the triangle and the retest of the next support level at 112.28. However the overall picture remains to the upside, a turn above FE61.8 level and the 50-day SMA, at 113.00, could trigger the attention toward the upper line of the triangle again.