The USD/JPY bearish below 106.80 – Powell to deliver impulses at Jackson Hole?

By Admiral Markets

Source: Economic Events August 23, 2019 – Admiral Markets’ Forex Calendar

Since the economic calendar is quite thin into the weekly close, all eyes will likely be on Fed chairman Powell’s speech from the symposium in Jackson Hole.

This is particularly true in regards to the USD/JPY, after the BoJ confirmed on Wednesday that deputy governor Wakatabe attends the Jackson Hole symposium instead of Haruchiko Kuroda, meaning that no significant, market-moving news from Japan’s central bank should be expected.

While US-Treasury yields seem to find at least a short-term bottom over the last few days (going hand in hand with no further escalation in the trade dispute between the US and China), the JPY saw no significant gains against the US dollar.

Still, the USD/JPY couldn’t recapture 106.80/107.00. The main reason is probably that market participants, with interest rates making historic moves globally, expect Fed chair Powell in Jackson Hole to clarify the intentions of the US central bank in regards to further rate cuts.

And in addition to that, the latest tweets from US president Trump last Monday, where he started to talk the first time about “some quantitative easing” from the Fed, one could probably also expect some hints from Powell in regards to extraordinary monetary policy measures like re-launching QE anytime soon and if further rate cuts aren’t working in case of an economic downturn.

With that in mind, we stay bullish for the JPY against the USD, technically as long as we trade below 106.80/107.00, where we expect another stint to 105.00 and even lower.

Recapturing 106.80/107, on the other hand, could trigger a deeper regressive move in the days to come to around 108.50/109:

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between May 24, 2018, to August 22, 2019). Accessed: August 22, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of USDJPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, meaning that after five years, it was up by 4.1%.

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