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USD/JPY flat ahead of BoJ announcementThe Japanese yen is in a holding pattern on Monday as the Bank of Japan holds a two-day meeting today and Tuesday. In the European session, EUR/USD is trading at 148.05, down 0.08%. The yen has been on a rollercoaster in recent weeks. In December, the yen took advantage of a slumping US dollar and surged 4.85%. Those gains have been squandered as the dollar has rebounded in January and jumped 5.1%. On Friday, USD/JPY touched a high of 148.80, its highest level since November 28. The 150 level is not too far away and if the yen continues to lose ground, concerns will mount that the Ministry of Finance could intervene to prop up the yen. The Bank of Japan will wrap up its policy meeting on Tuesday, and any hints of a shift in monetary policy would likely send the yen sharply higher. The markets aren't expecting the central bank to change policy settings, although the BoJ, which isn't known for transparency, has surprised the markets before. The BoJ is expected to abandon negative rates, but Tuesday's meeting doesn't seem to be the right timing. Inflation has been easing and the economy remains fragile. The major earthquake on January 1 has contributed to the markets lowering expectations of a policy shift at this meeting. As well, the national wage negotiations take place in March and the BoJ would prefer to analyse the results of the wage talks before making any policy changes. This would point to the April meeting as being more ripe for a major announcement. Even if the BoJ stays on the sidelines tomorrow, investors will have plenty to digest, including updated inflation reports, quarterly economic projections and Governor Ueda's follow-up press conference. USD/JPY tested resistance at 148.28 earlier. Above, there is support at 148.71 There is support at 147.74 and 147.31
by OANDA
Will Yen Tank to New Lows?The Japanese Yen is one of the worst performing currencies in 2024. It has weakened 5.4% against the USD. Forces have been stacked against Yen ever since the US Federal Reserve started raising interest rates at a record pace. In sharp contrast, ultra loose monetary stance from the Bank of Japan (BoJ) resulted in wide policy rate differential of 5% between short-term interest rates in both countries, which has contributed to Yen weakness. The Yen made a recovery in December driven by a dovish Fed and hopes of BoJ exiting its ultra-loose policy in 2024. Yen rose to levels unseen since June 2023. However, thus far in 2024, the Yen has weakened as recent developments have cemented the need to maintain current loose monetary policy in Japan. An Earthquake that struck Japan at the start of the year caused infrastructure damage. Stimulus will be required to fix that. Inflation in Japan is retreating to BoJ’s target range rapidly. Consequently, the central bank may see no rush to start hiking rates given uncertain recovery in economic growth. This paper describes various forces at play and establishes a hypothetical trade setup using CME Japanese Yen futures to harness gains from weakening Yen. BOJ’s MONETARY POLICY MAY STAY LOOSER FOR LONGER 1. Aid for Earthquake Relief: On January 2nd, a severe earthquake hit near Japan's Ishikawa prefecture , causing widespread destruction, damaging over 4,000 homes. The area continues to experience aftershocks, adding to the damage. Moody’s RMS predicts insured losses from the earthquake could be between USD 3 billion and USD 6 billion. In response, Japan's Prime Minister Fumio Kushida plans to double earthquake relief funds to USD 7 billion in the next fiscal year to aid recovery efforts. Given the economic fallout, the BoJ is likely to maintain its lenient monetary policy in the near future. 2. Cooling CPI: Japan’s most recent CPI figures showed inflation cooling to 2.6% in December from 2.8% in November. That is the lowest reading since July 2022. Core CPI, which excludes fresh food, a measure referenced by the BoJ, fell to 2.3% from 2.5%. Inflation excluding fresh food and energy was 3.7% YoY, which was also lower compared to November’s 3.8%. The core CPI reading is just a hair above BoJ’s target range of 2%. Inflation was driven lower by decline (11.6% YoY) in energy costs. The large drop was due to base effects of high energy prices last year. Services inflation remained unchanged at 2.3% fuelled by higher wages. That is positive news for the BoJ which aims to establish sustainable domestic-demand & wage-growth driven inflation. With wage hikes from the Shunto negotiation in March-April still undecided, the BoJ is unlikely to pre-empt the exit from loose policy. Therefore, the next two policy meetings are unlikely to lead to a policy shift. BoJ Policy Meeting calendar ( BoJ ) FED POLICY MAY NEED TO REMAIN TIGHTER FOR LONGER Meanwhile, concerns are plenty in the US too. Inflation rebounded in December. Core inflation remains strong. Robust retail sales suggest consumers are resilient and still spending. Jobs data from December was healthy. Recent jobless claims points to further strength in the labour market. Put together, the Fed will not rush to cut rates as markets expect. This is exemplified by diverging market and Fed expectations for rate path. According to CME FedWatch tool (as of 22/Jan), markets are expecting 5 rate cuts in 2024 while Federal Reserve's dot plot suggested only 3 rate cuts would take place. Both factors, from Japan and the US together, suggest fundamental Yen weakness and these conditions are expected to persist for longer. YEN INTERVENTION WARNING Despite the fundamental weakness, there are risks from betting against further Yen weakening. As the currency weakened rapidly past 148/USD, the Japanese Finance Minister, Shunichi Suzuki, stated that the government is closely watching developments in the currency markets. He stressed the importance of stability and that market movements should reflect economic fundamentals. Likelihood of intervention remains high and its impact on the Yen has been discussed previously . MARKET METRICS Options market activity points to a contrasting trend. Recent open interest change in CME Group Japanese Yen options have been tilted towards higher calls signalling hopes of Yen strengthening. Overall positioning points to a similar contrary trend. CME Group Japanese Yen options OI change between 11/Jan and 19/Jan ( QuikStrike ) Despite the recent rally, implied volatility has not spiked significantly. They remain well below the highs seen in mid-December around BoJ’s policy meeting. Moreover, options skew remains elevated from its lows observed in late-October when the sentiment around Yen was heavily bearish. CME Japanese Yen options CVOL index and options skew ( CVOL ) HYPOTHETICAL TRADE SETUP The BoJ is unlikely to exit its loose policy stance any time soon against the backdrop of rapidly slowing inflation and uncertain economic outlook. In the US, a rebound in inflation might delay Fed’s rate cut decision. Collectively, this points to fundamental Yen weakness. To limit downside exposure in case of intervention by Japanese officials in currency markets, a tight stop can limit losses. The below hypothetical trade setup suggests a short position in CME Group Japanese Yen futures expiring in March (6JH2024) that provides a 1.55x reward to risk ratio. CME Group Japanese Yen futures have maintenance margin of USD 2,600 and provide exposure to 12,500,000 Yen. • Entry: 0.0068115 • Target: 0.0066000 • Stop Loss: 0.0069500 • Profit at Target: USD 2,643 (68115 – 66000 = 2115 pips x 1.25) • Loss at Stop: USD 1,731 (69500 – 68115 pips = 1385 pips x 1.25) • Reward-to-Risk: 1.55x MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. 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CME:6J1!Short
by mintdotfinance
Levels discussed on livestream 22nd JanJanuary 22nd DXY: Break 103 to trade down to 102.80 NZDUSD: Buy 0.6140 SL 20 TP 45 AUDUSD: Look for reaction at 0.6650 resistance DXY strength; Sell 0.6575 SL 20 TP 50 USDJPY: Buy 148.80 SL 30 TP 90 or Sell 147.50 SL 30 TP 100 (Pending BoJ news event) GBPUSD: Sell 1.2690 SL 20 TP 47 EURUSD: Buy 1.0915 SL 25 TP 70 (Hesitation at 1.0940) USDCHF: Sell 0.87 SL 20 TP 60 USDCAD: Sell 1.3385 SL 25 TP 65 Gold: Stay above 2017 to maintain bullish move to 2040
TVC:DXY
by JinDao_Tai
GBPJPY: Thoughts and Analysis Pre-BOJToday's focus: Pattern – Continuation, resistance test. Support – 37,400 Resistance – 187.63 - 184.35 Hi, and thanks for checking out today's update. Our focus today is on the GBPJPY pre-Bank of Japan. Looking at price, we can see it continues to trade on fast trends higher but has stalled at resistance. The market could now be waiting to see what's next from the Bank of Japan. Will they tweak their bond-buying program? We have seen some solid volatility from past meetings. Could this be another? We have run over two scenarios in today's video, and we will look to see what happens next for the JPY after tomorrow's BOJ meeting. Rates are expected to remain on hold, and the statement and outlook report are expected between 11:30 am and 4 pm on Tuesday this week. Good trading.
by Eightcap
Japanese yen takes a tumbleThe Japanese yen is down sharply on Wednesday. In the North American session, USD/JPY is trading at 145.74, up 0.86%. Japan's wage growth was a major disappointment in November, with a meager gain of 0.2%. This follows the October reading of 1.5% which was also the estimate. This marked the lowest gain since December 2021. The weak wage data will support the Bank of Japan in maintaining its ultra-loose policy. Governor Ueda has hinted at a shift in policy but has stressed that won't happen before inflation is sustainable at 2%, backed by higher wage growth. The BoJ is looking ahead to the annual wage negotiations in March. If workers win significant pay raises from employers, that could set the stage for the BOJ tightening interest rates in April. The US dollar has looked sharp early in 2024, despite the Fed pivoting sharply and signalling that it plans to raise rates this year. The dollar has surged 3.3% against the yen in January, after a 4.85% decline in December. Last week's nonfarm payroll report was stronger than expected, providing support for the Fed to maintain rates in restrictive territory until inflation falls closer to the 2% target. This 'higher for longer' stance was reiterated by Atlanta Fed President Bostic on Monday, who stated that he had a "natural bias to be tighter" and anticipated two rate cuts by the end of the year, with an initial one in the third quarter. This is a far cry from market expectations of up to six rate cuts this year, starting in March. USD/JPY has pushed above resistance at 144.93 and 145.37. Above, there is resistance at 146.13 There is support at 144.17 and 143.73
by OANDA
Early Entry around Range Resistance Overview CADJPY is showing signs of upside momentum weakening. Price may attempt a bearish move to the weekly range support around 95.00. The Details Fundamental Analysis The Bank of Canada (BOC) may be one of the first central banks (apart from the ECB) to cut interest rates. On the other hand, the Bank of Japan (BOJ) will likely start hiking rates in 2024. This means CAD weakness and JPY strength. Canadian inflation is nearing 2%, and signs of recession increase the chances of the BOC cutting rates. Technical Analysis The most recent swing high was slightly higher than the previous one, suggesting upside momentum is weakening. There is a bearish divergence on the weekly RSI. Things to consider Canadian inflation is currently (as of early January 2024) at 3.10% and declining. If inflation becomes stubborn or increases, the chances of BOC rate cuts become less likely. The swap rate for shoring this pair is not favourable. Multiple short-term positions may be more profitable than a long-term position. Price action may form a fake-out move above 110.00 before becoming bearish.
Short
by Samuel_Morton_Trader
USDJPY Outlook (1st Qtr 2024)Is it going to be the same story again for the USDJPY? In 2022, the USDJPY climbed to reach just below 152 before turning down to the 128 support level. The similar price movement played out in 2023 as the USDJPY rose from the 128 support level to retest the 152 resistance level. The USDJPY has reversed down to the 140 price area (50% Fibonacci retracement level), primarily due to the weakness of the DXY as markets began to price in rate cut scenarios from the US Federal Reserve. This move lower was also due to rumors that the BoJ could end its ultra-loose monetary policy at the December 2023 meeting. However, the BoJ has so far maintained its current policy stance as it continues the fight to bring inflation down to its 2% target level. The longer the BoJ persists with its negative rates regime in 2024, this could continue to bring weakness to the Yen. Combined with some retracement on the DXY, the USDJPY could retest the 143-144 price area (38.2% Fibonacci retracement) in the short term. Look for the BoJ to signal a plan for policy normalization in 2024, to lead to further downside. However, it'll be crucial for the USDJPY to break below the 138-round number support and 61.8% Fibonacci retracement level before we can see a significant downside to the 128-support level again.
Short
by JinDao_Tai
USD/JPY steady, BoJ releases summary of opinionsThe Japanese yen continues to have a quiet week. In the European session, USD/JPY is trading at 142.54, up 0.12%. The Bank of Japan's summary of opinions from the December meeting was released earlier today. That meeting was somewhat of a disappointment to the markets, as there were expectations of a move after senior BoJ members hinted prior to the meeting that the Bank was looking to lift interest rates out of negative territory. In the end, the BoJ stayed put and maintained policy settings. The summary highlighted the split amongst board members regarding the exit from ultra-loose monetary policy. One member stated that the timing of normalizing policy was "getting closer" but another member said that the BoJ could wait until after wage talks next spring. The internal debate revolves around the key question as to when inflation will become sustainable at the 2% target. Governor Ueda has argued that wage growth must increase before inflation is sustainable and that the current high rate of inflation is due to cost-push factors. This means that national wage talks in April will play a key role in determining the BoJ's rate policy. The takeaway from the summary is that an exit from ultra-loose policy is a question of when rather than if, and that there are differences of opinion within the central bank as to the timing of a shift in policy. We have seen that tweaks to the yield curve control program have triggered sharp movement from the yen, and it's a safe bet that a shift in policy would send the yen flying higher. BoJ policy meetings have become market-moving events and every comment from a senior BoJ official has the potential to shake up the currency markets. The BoJ holds its next meeting on January 22-23. USD/JPY is putting pressure on resistance at 142.55. Above, there is resistance at 142.78 There is support at 142.34 and 142.11
by OANDA
USD/JPY yawns after BoJ CPI slipsThe Japanese yen is showing little movement on Tuesday. In the European session, USD/JPY is trading at 142.39, down 0.04%. Japanese inflation indicators have been heading lower. Last week, Core CPI, which excludes fresh food but includes fuel costs, dropped in November from 2.9% to 2.5%. On Tuesday, the Bank of Japan's Core CPI index followed suit and declined to 2.7% in November, down from 3.0% in October. Core inflation may have dropped in November, but it has exceeded the BoJ's 2% target for well over a year and speculation is high that the central bank will shift policy and lift interest rates from negative territory, perhaps in early 2024. Such a move would mark a sea change in monetary policy, after decades of negative rates. We have seen that tweaks to the yield curve control program have triggered sharp movement from the yen, and it's a safe bet that a shift in rate policy would send the yen flying higher. BoJ policy meetings have become market-moving events and every comment from a senior BoJ official has the potential to shake up the currency markets. BoJ Governor Ueda has hinted that the economy is slowly moving towards the BoJ target, but the central bank wants to see stronger wage growth before it considers inflation to be sustainable. The BoJ has insisted that current inflation is being driven by cost-push factors and is not sustainable. On Monday, Ueda said that he would consider shifting policy if the "cycle between wages and prices intensifies" but added that there was no specific timing to changing the Bank's ultra-loose policy. The US wrapped up last week with the PCE Price Index, the Federal Reserve's preferred inflation indicator. The headline reading fell to 2.6% y/y in November, down from a downwardly revised 2.9% in October and lower than the market consensus of 2.8%. The core rate eased to 3.2%, down from a downwardly revised 3.4% and lower than the market consensus of 3.3%. The numbers are welcome news for the Fed and support the case for rate cuts next year. Fed Chair Powell has pencilled in three cuts in 2024 but the markets have priced in up to six cuts. Investors have priced in a rate cut in January at 14%, up from 8% a week ago, according to the CME's FedWatch tool. USD/JPY is putting pressure on resistance at 142.55. Above, there is resistance at 142.78 There is support at 142.34 and 142.11
by OANDA
USD/JPY eyes inflation, BoJ minutesThe Japanese yen is in positive territory on Thursday. In the European session, USD/JPY is trading at 142.85, down 0.61%. Later today, the US releases third-estimate GDP for the third quarter, which is expected to confirm that the economy grew at an impressive rate of 5.2% q/q. Japan's Core CPI, which excludes fresh food but includes energy, is considered the preferred inflation gauge for the Bank of Japan. The November report, which will be released on Friday, is expected to fall to 2.5% y/y, compared to 2.9% in October. Core CPI has exceeded the BoJ's 2% target for 19 straight months, putting pressure on the central bank to tighten policy. The BoJ has insisted that high inflation is a result of cost-push pressures and that higher wage growth is needed to ensure that inflation is sustainable. Still, a shift in policy from the BoJ is likely a question of when rather than if, with senior BoJ officials hinting that the central bank is considering tightening its ultra-loose policy. Japan's government expects inflation to remain well above the target and has revised upwards its inflation forecast to 2.5% for the fiscal year starting in April. The previous forecast stood at 1.9%. The government said that the upward revision was due to a weaker yen, higher oil prices and the expected reduction in subsidies for utility costs. The Bank of Japan will release on Friday the minutes from the meeting on October 31. At the meeting, the BoJ maintained policy but removed the 1% upper ceiling on its yield control curve (YCC) program, saying 1% would remain a reference level. The tweak was enough to shake up the currency markets, as the yen plunged 1.78% against the US dollar on October 31, its sharpest daily gain since February. Investors will be looking through the minutes for further details about the decision to tweak YCC and any hints about future rate policy. USD/JPY has pushed below support at 143.18 and is testing support at 142.80. Below, there is support at 142.34 There is resistance at 143.64 and 144.02
by OANDA
USDJPY H4 | Falling to 61.8% Fibo supportUSD/JPY is falling towards an overlap support and could potentially bounce off this level to climb higher. Buy entry is at 142.466 which is an overlap support that aligns with the 61.8% Fibonacci retracement level. Stop loss is at 140.800 which is a level that lies under a swing-low support. Take profit is at 144.954 which is a pullback resistance that sits under the 78.6% Fibonacci retracement level. High Risk Investment Warning Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd, previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763), please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Please be advised that the information presented on TradingView is provided to FXCM (‘Company’, ‘we’) by a third-party provider (‘TFA Global Pte Ltd’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by TFA Global Pte Ltd. The speaker(s) is neither an employee, agent nor representative of FXCM and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of FXCM or any form of personal or investment advice. FXCM neither endorses nor guarantees offerings of third party speakers, nor is FXCM responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
Long
by FXCM
USDJPY Hunting Resitance On Hawkish BoJUSDJPY came sharply to the downside recently on the hawkish BoJ which now saying that normalization can happen, possibly in March of 2024. Also, Ueda said that policy change could involve element of surprise . So we evne shoudl be aware of some volatile price moves in weeks ahead, ideally in favour of the JPY. From an Elliott wave perspective we see nice turn lower, through the daily trendline support so more weakness can be coming after a corrective rally that is still in play. I see some nice resistance for wave 2/B rally is at 146.60-148. GH
by ew-forecast
USD/JPY - Yen climbs to 4.5 month high, BOJ nextThe Japanese yen is lower at the start of the week. In the European session, USD/JPY is trading at 142.77, up 0.44%. The yen continues to power higher and surged 1.9% last week. It marked a fifth straight winning week for the yen, which has climbed 6.2% during that time. The yen strengthened to 140.95 on Friday, its highest level since July 31. Bank of Japan policy meetings have become must-see events, with investors on edge over speculation that the central bank is planning to tighten policy. Tuesday's meeting will be closely watched, especially after hints from senior BoJ officials that it could phase out negative rates, which would be a sea-change in policy that would likely boost the yen. The BoJ might not announce any changes at the meeting, but I doubt that will quell speculation that a policy change is coming. The BoJ tends to hold its cards close to its chest, maximizing the surprise effect of any policy moves. The BoJ has been an outlier among central banks in sticking to an ultra-loose policy while its peers were busy raising rates, and the BoJ is expected to tighten policy next year while other major central banks are looking to cut rates. The BoJ has long insisted that inflation is not sustainable, but that position has become difficult to defend, as inflation has remained above the 2% target month after month. New York Fed President John Williams said on Friday that the Fed was not discussing rate cuts and that the Fed could tighten policy if inflation stalled or reversed directions. The markets don't seem to be listening, however, and have priced in six rate cuts next year, starting as soon as March. At last week's meeting, Fed Chair Jerome Powell finally jumped on the rate-cut bandwagon and said that the Fed would cut rates three times in 2024. USD/JPY is testing resistance at 142.61. Above, there is resistance at 143.06 There is support at 142.02 and 141.57
by OANDA
USDJPY H4 | Overhead resistance at 38.2% Fibo?USD/JPY could rise towards a pullback resistance and potentially reverse off this level to drop lower. Sell entry is at 143.058 which is a pullback resistance that aligns with the 38.2% Fibonacci retracement level. Stop loss is at 144.538 which is a pullback resistance that aligns with the 61.8% Fibonacci retracement level. Take profit is at 140.949 which is a swing-low support level. High Risk Investment Warning Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. Stratos Markets Limited (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd, previously FXCM EU Ltd (www.fxcm.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Trading Pty. Limited (www.fxcm.com): Trading FX/CFDs carries significant risks. FXCM AU (AFSL 309763), please read the Financial Services Guide, Product Disclosure Statement, Target Market Determination and Terms of Business at www.fxcm.com Stratos Global LLC (www.fxcm.com): Losses can exceed deposits. Please be advised that the information presented on TradingView is provided to FXCM (‘Company’, ‘we’) by a third-party provider (‘TFA Global Pte Ltd’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by TFA Global Pte Ltd. The speaker(s) is neither an employee, agent nor representative of FXCM and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of FXCM or any form of personal or investment advice. FXCM neither endorses nor guarantees offerings of third party speakers, nor is FXCM responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
Short
by FXCM
USDJPY did what it should do as Per my analysis,what next?Hello fellow traders , my regular and new friends! Welcome and thanks for dropping by my post. Here's my evaluation of the pair and moving forward what is there to expect. But let's revisit what has happened over this week. If you have not yet seen my previous post of USDJPY , you maybe refer to link below or here >> Let's roll back on time on USDJPY to Monday, the start of the week. We see that it has been super bullish on Monday clearing the 145 and even 146.5 level that I have mentioned. First of all we don’t see any sign on turning even on the one hourly chart for UJ. Therefore, nothing for us to short on that day. The interesting part comes on Tues, where it seems like all the technicals aligned. You can refer back to the analysis post I mentioned last week. I mentoned about the downtrend line on the daily and H4. 146.5 area also coincide by the last support turned resistance I hightlighted. So, naturally here's the place for us to look for short, which we saw a breakout of the consolidation and it came lower. If you missed that, we do have opportunities to short 2 more times before the last strong move downwards on Thursday 3am Singapore time. And then, for the rest of Thurs to Fri, it has been consolidating. So, what to expect next? Like I have mentioned, if the BOJ has no sign of increasing its rate, tighten their monetary policy, very likely we would see the USDJPY to resume back its longer term uptrend moves. BUT if the BOJ indeed has some "actions" or hint to increase it rate and tighten, the likely the market will move further downwards. And that's probably why the USDJPY has consolidated right on its up trendline of the year since Jan 2023. Let's see how PA unfolds from here on! Happy Trading! Do Like and Boost if you have learnt something and enjoyed the content, thank you! -- Get the right tools and an experienced Guide, you WILL navigate your way out of this "Dangerous Jungle"! -- ********************************************************************* Disclaimers: The analysis shared through this channel are purely for educational and entertainment purposes only. They are by no means professional advice for individual/s to enter trades for investment or trading purposes. ********************************************************************
by Shadowing_The_Big_Boys
USDJPY: Strong Elliott Wave Bearish Reversal On Hawkish BoJUSDJPY is coming sharply to the downside this week as hawkish BoJ hinted a potential policy change in 2024. We see strong breakdown on USDJPY, below the chanel support line on the daily chart which makes us think that this is a new higher degree decline that should be done with three waves down minimum. So be aware of more weakness in weeks ahead, especially after we see any bounce back in wave 2 or B rally. One of the reasons why USDJPY can be headed much lower is also the US nod market which can be bottoming, as speculators believe that the FED is done. So with speculators betting on hawkish BOJ and "dovish" FED for 2024, the pair can be headed to 137. Grega
Short
by ew-forecast
1
USDPY Long term Sell signalNavigating the JPY and Japanese Bond Market Dynamics: Unraveling the Headlines Introduction: Unprecedented Moves Grab Headlines Recent outsized movements in the Japanese yen (JPY) and the Japanese bond markets have become the focal point of financial headlines. The prevailing narrative suggests that Japan is finally on the path to unwind its super easy monetary policy, causing yields to surge and the yen to strengthen. This phenomenon, rooted in simple and intuitive FX pricing theory, revolves around wide yield differentials and low volatility, making borrowing in JPY to buy USD an attractive proposition. However, as yield differentials narrow, the unwinding of this "carry trade" leads to a stronger JPY. Understanding Yield Differentials: A Global Bond Rally One might question why yield differentials are narrowing. Contrary to assumptions, the Bank of Japan (BoJ) is not the sole driver. Globally, bonds have experienced increased demand since October, with a substantial decline in the blue line from 350 basis points to 270 basis points, primarily attributed to U.S. Treasuries rather than Japanese bonds. At the current level of yield differentials, USDJPY should theoretically be at 140. In July, the 10-year yield differential between Japan and the U.S. was 280 basis points, and USDJPY stood at 138. Presently, with a lower yield differential of 270 basis points, USDJPY has surprisingly risen to 144. Crude Oil's Impact on JPY: A Global Macro Driver Another crucial factor influencing JPY's price action is the dramatic movement in crude oil prices. As Japan is a net importer of crude oil and the U.S. a net exporter, a rapid decline in oil prices prompts USDJPY to decrease. The yen appreciates as the terms of trade for Japan become more favorable in the wake of declining oil prices. In essence, the yen is adjusting to international macroeconomic fundamentals rather than responding to domestic factors or an imminent risk of a hawkish shift by the BoJ. Considering Global Macroeconomic Scenario: BoJ's Dilemma Contemplating a hypothetical scenario, if the Bank of Japan were to tighten its policy after over 20 years of near-zero interest rates and quantitative easing, global inflationary pressures continuing to subsidize could present challenges. A rapid strengthening of the yen could thwart Japanese inflation and wage aspirations from settling at the targeted 2%, reigniting a deflationary mindset. Recap: Unraveling the JPY Rally In summary, the rally in the JPY, despite the absence of services inflation and wage growth justifying a BoJ hawkish shift, can be attributed to two primary factors. Firstly, a global bond rally compressing yield differentials and secondly, collapsing oil prices benefiting Japan as a net importer. The puzzle's final piece involves contemplating the potential impact of these Japanese developments on global bond markets. Japan's Role as a Capital Exporter: Impact on Global Bond Markets Japan, as a massive exporter of capital, has Japanese investors holding trillions of dollars in foreign assets, particularly significant in Treasury markets. Although absent from Treasury markets since late 2021 and actively selling bonds in 2022, recent trends indicate a return to buying Treasuries. This raises questions about the driving forces behind Japanese investors' renewed interest in Treasuries. FX Risks and Treasury Yields: The Japanese Perspective Japanese investors engaging in foreign bond purchases face inherent FX risks. The process of converting JPY into USD to buy bonds and subsequently reverting the FX transaction means that USDJPY fluctuations significantly impact the profit and loss (P&L) of their bond transactions. Hence, Japanese investors approach Treasury yields differently, as demonstrated by the orange line depicting 10-year Treasury yields through the eyes of a Japanese investor. This perspective includes a 12-month hedge against USDJPY risk to manage FX exposure over a reasonable period. Conclusion: A Multifaceted Journey of the JPY In conclusion, the recent surge in the JPY and Japanese bond markets unravels as a multifaceted journey driven by global dynamics, oil prices, and Japan's role as a capital exporter. While headlines may hint at a simplistic narrative of BoJ actions and monetary policy shifts, a closer look reveals a complex interplay of factors shaping the trajectory of the Japanese yen and its impact on global financial markets.
Short
by Tradingstrategyguides
US Dollar Steadies as Market Awaits Economic Data, Yen SoftensIn early European trading, the US dollar steadied near a one-week high against a basket of currencies, holding at 103.559 on the Dollar Index. This stability follows a period of weakness in November, marked by traders anticipating significant rate cuts by the Federal Reserve in the coming year. However, recent actions have seen a shift in sentiment as investors scaled back on dovish expectations, waiting for crucial economic indicators this week, including job openings, ISM services activity data, and the highly anticipated nonfarm payrolls report on Friday. Amid this anticipation, the Japanese yen experienced a slight dip against the dollar, trading at 147.08, influenced by concerns over inflation. Tokyo's Core CPI for November showed a decrease to 2.3%, down from October's 2.7% and below the expected 2.4%. The Bank of Japan remains cautious about tightening its monetary policy despite persistent inflation above the 2% target, citing the need for sustained wage growth for long-term inflation sustainability. The BoJ's upcoming meeting in mid-December will be closely watched for any potential policy shifts. As for the US, focus is on the imminent release of the ISM Services PMI, being for November hovering around 52.7 after October's decline to 51.8. Meanwhile, technical analysis for USD/JPY indicates resistance levels at 148.77 and 147.72, with support at 146.48 and 145.96 Risk Disclosure: Trading Foreign Exchange (Forex) and Contracts of Difference (CFD's) carries a high level of risk. By registering and signing up, any client affirms their understanding of their own personal accountability for all transactions performed within their account and recognizes the risks associated with trading on such markets and on such sites. Furthermore, one understands that the company carries zero influence over transactions, markets, and trading signals, therefore, cannot be held liable nor guarantee any profits or losses.
Short
by legacyFXofficial
What Next For The Yen?In Karate, offense is the best form of defence. The BoJ knows it. Japan faces a raft of economic headwinds which shows up in Yen’s performance. The BoJ intervened strongly last year to support the currency when it skirted around current levels. Yen is hovering at those levels again. BoJ is anticipated to act. Such interventions typically mark the bottom. This paper explores recent economic data to analyse the potential for monetary policy changes by BOJ. JAPANESE MACROECONOMIC CONDITIONS HAMPER YEN FROM STRENGTHENING Starting September, the Yen has trended lower relative to the USD among currency majors. The Yen has weakened the most. As described previously , BoJ’s aims to kickstart the economy onto a high growth trajectory to exit decades of painful deflation. Recent macroeconomic data indicates weakness. This reaffirms the need for continued loose monetary policy. However, a frail Yen poses a different type of challenge for the BoJ with higher import costs for fresh food and fuel. This leaves the BoJ in a predicament between loose monetary policy and intervention to support the Yen. What does recent inflation, GDP, and wage data point to? Inflation Inflation declined M-o-M in September. CPI cooled to 2.8% falling below 3% for the first time in a year. Importantly, Japan’s producer prices are now below 2% in a sign that inflation might have peaked. Consumer prices will fail to prevail above 4% for long with input prices moderating. The BoJ expects inflation to persist until March next year at current levels and to cool towards target rates in the following 12 months. GDP Growth The Japanese economy shrank 2.1% YoY in Q3. This is far below expectations of 0.6% decline and a sharp slowdown from +4.5% growth in Q2. Slow economic growth makes economic stimulus essential to sustain it. Wages Nominal wage growth continues to decline. Real wages are even more concerning. Wages have declined for the last 18 months when adjusted for inflation. Next Shunto negotiations are set to complete by mid-Jan 2024 with outcome remaining uncertain. The BoJ highlighted that wage uncertainties and price-setting behaviour pose upside risk to prices. Meanwhile, high inflation will keep impacting real wages, affecting people's ability to spend. THE BANK OF JAPAN IS STUCK BETWEEN A ROCK AND A HARD PLACE At the October monetary policy meeting, the BoJ announced changes to the bond yield cap. The Yield Curve Control (YCC) policy and range were kept unchanged. However, a small modification was made to change the 1% JGB yield cap from a rigid one to a loose reference. These changes hint at BoJ setting itself up for the eventual roll-back of the YCC policy altogether. Next BoJ policy meeting is set for December 19th. The BoJ will likely maintain stimulus and hold rates low amid feeble consumer & business spending. The policy change will be through YCC dismantling, impacting the JGB market. It will require careful planning and deft timing. Meanwhile, the BoJ may intervene to stem continued Yen weakness. The officials have expressed this sentiment over the last two weeks via warnings for participants shorting the Yen over the past two weeks. Japan’s Ministry of Finance (MoF) intervened three times last year, injecting USD 68 billion to support the Yen when it was trading near 150/USD. These interventions, unannounced, led to sharp and unexpected currency moves. Unlike previous exchange rate-based interventions, the BoJ’s current predicament revolves around volatility and public perception. Reuters reports that if Japan aims to prevent yen appreciation, the MoF will issue short-term bills to raise Yen, which is then sold in the market to weaken the currency. Alternatively, to curb Yen depreciation, authorities will tap into Japan's FX reserves, exchanging dollars for the Yen. In recent weeks, Japanese authorities have issued warnings and expressed readiness to intervene as the Yen continues to weaken, despite a moderating USD. Masato Kanda, Japan's top currency official, emphasized the urgency of their judgments and the potential for intervention, resonating with rhetorics used a year ago. MIXED SIGNALS FROM CURRENCY DERIVATIVES MARKETS Although asset managers are not positioned as net short as they were in late-September, they increased their net short positioning (weakening Yen) last Tuesday. Similarly, leveraged funds also increased net short positioning sharply last week. Options markets contrarily signal strength in the Yen. P/C ratio for CME Japanese Yen Options (JPU) is 0.42 implying two puts for every five calls. JPUs are quoted with the Yen as the base currency so call options express a view of the Yen strengthening. Moreover, bullish bets have increased heavily over the past week. Specifically, nearest monthly and weekly contracts (JPZ3 and WJ4X3) show Yen strengthening in the near term. Bullish bets in December options outnumber bearish bets by three times. Although put open interest (OI) is concentrated near current levels with the highest OI at 0.0066 (151 in USD/JPY), call OI is more spread across with a large OI at strike of 0.0069 (145 in USD/JPY) which has ballooned over the last week. This signals that options market expects Yen strengthening by next month. Finally, implied volatility on JPU is near its lowest level since March 2022. Source: CME CVOL Options skew on JPU is close to one, indicating that premiums on calls and puts are equally priced. Convexity remains elevated signalling investor interest in OTM options suggesting likelihood of sharp moves ahead. HYPOTHETICAL TRADE SETUP Given 12-month low implied volatility, a position in JPU can yield cost-effective protection against sharp Yen moves. Alternatively, with the anticipated stability in Japanese interest rates, a short futures position in CME Japanese Yen futures, as previously discussed in a paper , is a viable approach to capitalizing on Yen's expected weakening. We can tap into JPU to safeguard this position against unforeseen risks of yen strengthening from BoJ intervention. Furthermore, CME offers weekly options for Japanese Yen futures, expiring from Monday through Friday of the week. This enables investors to attain short-term exposure on a more focused scale, accompanied by lower premiums compared to monthly options. A long call option position in JPUZ3 (expiring on December 8) would benefit from a BoJ intervention. The trade setup consists of an entry at a strike of 0.0068 (JPY 147.0588) in JPUZ3 call options. These options are at a delta of 25 and expire in 30 days providing a good trade-off between low premium and adequate exposure to the underlying. As of settlement on November 17th, premium for these options stood at USD 245 at an implied volatility of 8.26%. Source: CME Options Calculator The position breaks even at 0.00682 (JPY 146.6275) and turns profitable when (a) underlying futures price increases above strike price, and/or (b) implied volatility increases. Source: CME QuikStrike MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services. Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. 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CME:6J1!Long
by mintdotfinance
USDJPY: Trendline breakout, wait for retestLooks like USDJPY has broken down through the rising trendline, there was a slight recovery at the backend of Friday, this indicates we could see a short retracement from here to test the trendline break, and then down. The Yen performed well at the start of Friday, I don't believe this was BoJ intervention, as they have said that they expect the fundamentals to play out - we'll see, bad data from JPY this week may necessitate intervention, however good data on Friday (PMI) will I think be enough to start the recovery process for the Yen. If Japan looks like it's going to have a soft landing then I think markets will reward the Yen with a more positive sentiment and this could mean we get a lot of good action for these crosses. I think the USD is done being bullish for now (even the hawkish speakers cannot convince the markets), so either way I think we'll see this pair fall, so monitoring LTF's for a suitable entry / rejection from the retest point. A break below 148.5 will see a more sustained move to the downside, imho.
Short
by Finchcliffe
USD/JPY slips on soft US inflationThe Japanese yen has rebounded on Tuesday with strong gains. In the North American session, USD/JPY is trading at 150.70, down 0.67%. The yen has snapped a nasty six-day losing streak which saw the currency lose 1.5%. The US dollar is broadly lower today after the October inflation report was weaker than expected. US inflation was softer than expected in October. Headline CPI eased to 3.2% in October, down from 3.7% in September and August and lower than the market consensus of 3.3%. Much of the downswing can be attributed to lower gasoline prices. On a monthly basis, headline CPI was unchanged, compared to a 0.4% gain in September and a market consensus of 0.1%. The core rate, which excludes food and energy prices, showed a more moderate decline. Core CPI fell from 4.1% to 4.0%, shy of the market consensus of 4.1%. Monthly, core CPI dropped from 0.3% to 0.2%, below the market consensus of 0.3%. The markets have responded to the soft inflation print by repricing in a pause in December at 94%, compared to 85% a day earlier. Japan's GDP is expected to have contracted in the third quarter, with a consensus of -0.4% y/y. This would be a huge downturn from the 4.8% gain in the second quarter and could have significant ramifications on monetary policy. If the economy experienced negative growth as expected, the Bank of Japan will find support for its argument that the economy is too fragile to exit negative interest rates. There has been growing speculation that the central bank will tighten policy in the near term due to persistently high inflation and signs of wage growth. A weak GDP print will provide the BoJ with a reason to continue its ultra-loose policy until there is evidence that growth is strengthening. USD/JPY pushed below support at 151.61 and is testing support at 150.82 There is support at 150.05 and 149.29
by OANDA
AUDJPY: Interesting zone, continue up or Double top reversal?We're at the top end of the range for this pair, I am expecting BoJ to start backing its currency. I've recently noticed some negative correlation between USDJPY and the other XXXJPY crosses, so where USDJPY falls the others have been more bullish. That said if the BoJ get involved it will tank all of them. I'm not 100% what I really think will happen here, I think the Friday pinbar suggests there's more upward momentum, but will be very cautious if I trade as anything against the Yen (@which is staggeringly weak against everything). I'm opting for a move up and would keep a tight and chasing SL in place.
Long
by Finchcliffe
1