Feb 27 2019

Is Yen heading lower than a 100 and ten?

Traditionally, Japanese Yen has been considered as a go-to currency apart from the Swiss Franc or the US Dollar itself. Yellow metal or bond market also serve as safe haven during uncertain and volatile times like outbreak of war or even the trade war. But amongst the currencies, Yen has the most negative correlation with compared with global equities or bonds. This is because when the markets are in flux, the Japanese investors holding their investments overseas come back to their beloved country. They are politically more stable inspite of feeble economic growth.

Looking at the daily chart of USDJPY, one wonders how strong a resistance must 111 mark be. The pair went passed it earlier this week again, but the bulls couldn’t hold their horses for long and post US Fed Chairman, Jerome Powell’s testimony and further positive development on US-Sino trade war, the greenback went in for a dive bringing back the pair around 110.63.

Today with the development of the India-Pakistan war-like situation, Yen is again favored over other safer havens. Technically, the uptrend channel marked in blue seems quite intact (see our previous technical commentary on Yen – https://web.myforexeye.com/news/newsById/USDJPY–Technical-forecast/4405). There seems an opportunity for the bears to take charge in the short term with a near term target at 110. Next support is seen at 109.80. Resistance is seen at 110.90 and above that at 111.20.

Yesterday, the BoJ Core CPI year on year data came at 0.5% compared to an expected 0.6%; Economic data is heavy in the later part of the week. Foreign investment in Japanese stocks and bonds, Industrial production and Retail Sales, Construction orders and Housing starts are all due tomorrow; Tokyo Core CPI yoy, unemployment rate for Jan on Fri along with Manufacturing PMI (Feb).