USD/JPY: Scope for a test of 110.00 – MUFG

Matías Salord FXStreet

Analysts at MUFG Bank point out that risk will continue to be the key driver of the Japanese yen. They argue USD/JPY has closed above its 200-day moving for the first time since the end of April, opening the door to further gains towards 110.00.

Key Quotes:

“We assume risk-on type trading conditions will persist. That points to further yen depreciation. Since 8th October, the yen has weakened by around 2.0% versus the dollar and even more versus many non-dollar currencies but we see scope for this to be maintained into next week. There certainly looks to be scope for increased speculative yen selling. The leveraged yen positioning to Tuesday of last week was still modestly long yen – while yen depreciation since suggests yen short positions now, the scale of positioning remains modest. Secondly, weekly flow data from Japan indicates a notable pickup in Japan equity purchases by foreign investors. Purchases have totalled JPY 2,100bn in the last four weeks – down from JPY 2,752bn last week, the largest since April, which coincided with USD/JPY highs for 2019. If risk-on persists through next week, we see scope for a retest of the 110.00 level, especially given the breach of 109.32 – the Aug high.”

“The key for determining near-term direction of the yen is of course whether the risk on rally extends into next week. Good news over a possible trade deal is certainly now in the price but we don’t see disappointment coming and momentum points to some further yen selling ahead. Our USD/JPY yield based regression model suggests to us that yield is not a reliable influence in determining short-term direction.”

“A yield influence event next week for USD/JPY would be the testimony by Fed Chair Powell to the Joint Economic Committee but we doubt this testimony will be a notable market mover given it is unlikely to differ hugely from Powell’s recent FOMC press conference on 30th October. Hence, broader risk appetite and financial market conditions will be the key near-term influence.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD flirts with two-day lows near 1.3180

GBP/USD remains on the back foot in the latter part of Tuesday’s session, sliding to the sub-1.3200 area and challenging weekly lows. Cable’s decline comes as investors assess the political uncertainty in the UK, coupled with softer-than-expected UK PMI data and the better tone in the Greenback.

EUR/USD weakens below 1.1400 on stronger Dollar

EUR/USD adds to Monday’s losses and recedes below the 1.1400 support to clinch fresh 13-month lows in the latter part of Tuesday’s NA session. The pair’s marked sell-off comes on the back of the persistent move higher in th US Dollar, always propped up by rising bets of further tightening by the Fed.

Gold appears supported near $4,100 for now

Gold rapidly reverses Monday's bounce and is trading sharply lower on Tuesday. The yellow metal, however, manages well to keep business above the $4,100 mark per troy ounce despite a firmer US Dollar and expectations that the Fed will keep rates higher for longer.

Bittensor and Near Protocol Outlook: AI-linked tokens face deeper sell-off

The cryptocurrency market trades amid increasing sell-side pressure on Tuesday, reflecting a broader deterioration in sentiment and appetite for risk assets. Artificial Intelligence (AI)-linked tokens such as Bittensor (TAO) and Near Protocol (NEAR) exhibit both fundamental and technical weaknesses, trading at $217 and $1.99, respectively.

"Rearranging the deckchairs on the Titanic": UK's fiscal crisis outlasts another Prime Minister

Keir Starmer's resignation as the UK Prime Minister comes ten years after the Brexit referendum vote, a coincidence that financial markets have been quick to note. The British Pound trades around 1.3220 against the US Dollar on Thursday.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.