The USDJPY has been going through some interesting changes as of late, as the USD has surged back into vogue with bullish traders. This in part has been lead by stronger than expected US economic data – bar the recent NFP reading – which in turn has helped boost the prospects for the US economy and the outlook for inflation. As a result traders are clearly being much less risk averse and looking to move out of safe haven currencies, and this can be clearly seen in the USDJPY which has been climbing the charts strongly over the past two weeks. Originally many had worried about the Abe scandal regarding property, but that seems to have fallen to the way side and not having as large as impact as people had speculated. As a result the Yen continues to be quite strong, but the USD much more stronger.
One of the major points about the USDJPY has been the technical’s which it plays off strongly, and there has been a strong trend line which the USDJPY has been respecting thus far. The last two daily candles have seen a strong bounce under bearish pressure, so it’s clear that bulls are keen to keep the USDJPY on track. Right now we’ve also seen a rejection off resistance at 109.347, showing that right now the USDJPY is between a rock and a hard place and traders will be looking for direction based off the next major move. If we do see a push through 109.347 then I would expect to see bulls looking to target 111.083. If the bears however take control then I would expect to see a target of 107.718 in the long run, with further potential to go below this if the USD losses appeal to traders in the market. Nevertheless, the USDJPY continues to show great trending movements, but markets are waiting for the next move to take action.
The other shocker so far has been the AUDUSD which I touched on a bit last week. Dollar bulls have dominated this pair as it continues to look very bearish. This is on the back of weaker than expected Australian data, as Job Advertisements were down -0.2% on last month. However, business confidence saw a lift to 10 (8 prev) for this month, showing that businesses do think the economic situation is starting to get better.
Looking at the AUDUSD it’s clear to see that the bears have taken control. The AUDUSD was able to surge back and managed to even breakthrough resistance at 0.7546 before the bears swooped back in to reassert control. With the market continuing to remain bearish I am looking at a price target of 0.7472 and potentially further down at 0.7371 – if the market continues to run in this climate.