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24 Aug 2015
USD/JPY bears take out critical support before Tokyo
FXStreet (Guatemala) - USD/JPY is testing the downside at start of week and making progress through key supporting territories.
There has been no let-up to the downside, with the major taking at critical support in think markets ahead of the Tokyo session. Initially, the market opened with a bearish gap through the 122 handle and was supported momentarily above key support at 121.80/90 and the 38.2% retracement of the move up from July. However, this gave out and the bears squeezed the market down to the aforementioned lows before settling back to current levels just below the mid-point of the 121 handle.
This downside is an extension of the risk-off play that has been supportive of the Yen and harmful to EM's and other riskier global asset classes and equities. The implications of a downturn in China (Chinese weekend news) is worrisome and a driver of Yen strength and coupled with a dovish Fed, whatever was priced in is now starting to unwind further having lost the 124 earlier in the month.
Data for USD/JPY this week
The week ahead is a busy going to be a busy week for the US with Jackson Hole Symposium (27-29 Aug), although this year's Jackson Hole Symposium is unlikely to be a major market moving event in the noticeable absence of Fed Chair Yellen. We also have Durable Goods Orders (26 Aug) and US GDP (27 Aug) and such revisions to Q2 GDP should be positive and leave a favourable the handoff to Q3 GDP which should be supportive of the greenback.
USD/JPY testing critical 121.00/50 support zone
Technically, 121.50 is the 2015 uptrend and has been under attack but so far support is starting build ahead of more liquid markets that may well target the bearish gap as we progress through the week. Alternatively, a clear break of this aforementioned key support with closes below could confirm the correction is headed to between the 120.40/50 early July lows that are guarding the sideways 118.48 support line of March/April business.
There has been no let-up to the downside, with the major taking at critical support in think markets ahead of the Tokyo session. Initially, the market opened with a bearish gap through the 122 handle and was supported momentarily above key support at 121.80/90 and the 38.2% retracement of the move up from July. However, this gave out and the bears squeezed the market down to the aforementioned lows before settling back to current levels just below the mid-point of the 121 handle.
This downside is an extension of the risk-off play that has been supportive of the Yen and harmful to EM's and other riskier global asset classes and equities. The implications of a downturn in China (Chinese weekend news) is worrisome and a driver of Yen strength and coupled with a dovish Fed, whatever was priced in is now starting to unwind further having lost the 124 earlier in the month.
Data for USD/JPY this week
The week ahead is a busy going to be a busy week for the US with Jackson Hole Symposium (27-29 Aug), although this year's Jackson Hole Symposium is unlikely to be a major market moving event in the noticeable absence of Fed Chair Yellen. We also have Durable Goods Orders (26 Aug) and US GDP (27 Aug) and such revisions to Q2 GDP should be positive and leave a favourable the handoff to Q3 GDP which should be supportive of the greenback.
USD/JPY testing critical 121.00/50 support zone
Technically, 121.50 is the 2015 uptrend and has been under attack but so far support is starting build ahead of more liquid markets that may well target the bearish gap as we progress through the week. Alternatively, a clear break of this aforementioned key support with closes below could confirm the correction is headed to between the 120.40/50 early July lows that are guarding the sideways 118.48 support line of March/April business.