USD/JPY bears waiting for their wake-up call to attack 105

By Admiral Markets

Source: Economic Events August 30, 2019 – Admiral Markets’ Forex Calendar

As we enter the weekly close, we want to have a look at the USD/JPY again.

With the latest developments last week on Friday and risk-off hitting the global financial markets when US president Trump asked whether Fed chairman Powell or Chinese prime minister Xi was the bigger enemy of the US, warned that he would retaliate to China (which he did after markets closed by announcing new tariffs on Chinese goods), and ordered US companies to find an alternative to China. In the fallout, the JPY became one of the strongest performing currencies into the last weekly close.

After the currency pair opened below 105.00 last Monday, and briefly traded at its lowest levels since November 2016, the JPY gave back some of its gains while financial markets stabilised a bit.

One major reason was surely a comment from US President Trump who said at the G7 meeting on Monday, that China called over the weekend and started an attempt to get at a table with the US again which was not confirmed by the Chinese.

With rising scepticism that Trump probably “reinvented the truth” a little here, and the USD/JPY still trading below 106.80/107.00, the advantage clearly stays on the short-side in the coming days with uncertainty remaining high among market participants.

In general, USD/JPY traders should remain cautious and expect potential volatility, not only because of a packed economic calendar (ISM Manufacturing (Mo), ISM Non-Manufacturing, ADP (Wed), NFPs (Fri), but also with the still existing speculation of an outright currency market intervention from the US.

That said, a sooner-rather-than-later attack of the region around 105.00 and sustainable break lower should definitely be expected in the USD/JPY, while only recapturing 106.80/107 will brighten the technical picture a little:

Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between May 31, 2018, to August 29, 2019). Accessed: August 29, 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 the USD/JPY 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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