USD/JPY Looking For 100?
USD/JPY Looking For 100?
We have seen a clear downtrend in the USD/JPY since the U.S peaked in early April. The Coronavirus saw a rush to the cash, specifically the Greenback.
However, with the financial markets roaring back to life since then, the love for the Greenback has faded. Furthermore, many Japanese investors bringing back their capital out of U.S stocks back into their home currency, the Japanese yen. This has pushed the pair lower, with it currently sitting at 106.
This contrasts with the countries’ main stock index, the Nikkei 225, which has reached all-time highs touching 30,000. The last time it got close to 30,000 was in 1991, where the index touched 26,000.
If you held the Nikkei 225 from 1991 till the start of 2021, you would have been down 0.4%. In comparison, if you have held the S&P 500 from 1992 till the beginning of 2021, you would have been up around 1000%.
USD/JPY downtrend has been following a consistent channel
We can see the USD/JPY adhering to this downwards channel diligently, with a breakout in around June. We are currently witnessing a breakout similar to that in June, and if history is a guideline for the future, we may see the pair retreat back into the channel, possibly hitting the 100 mark in the middle of March.
Japan – A Currency Manipulator?
Many Asian nations, including Japan, have been accused of manipulating their currency, specifically to the downside.
It is estimated that foreign exchange reserves held by 12 Asian nations total more than 6.5. Trillion dollars, up 500 billion to counter the effects of the Coronavirus. Asian countries buy up foreign currency using their own, flooding the market with a flush supply of their currency, pushing their currency’s relative value lower. This benefits their exports, as it would be cheaper to purchase their goods in other countries – beneficial when your country is dependent on exports, and you are in the middle of a Pandemic.
This could be why there has been a steady downtrend in the U.S dollar against the Japanese Yen. We saw a steady rise from the start of 2020 in Japan’s foreign currency reserves from 1.34 Trillion U.S Dollars to 1.4 Trillion U.S Dollars, an increase of 660 Billion U.S Dollars.
After 200 articles, it is time for me to hang the coat up and say goodbye. This will be my last article for BlackBull Markets, and I am glad to have had the opportunity to provide content for clients at BlackBull Markets.
We have been seeing a pretty normal Elliott Wave count on the AUDJPY until this morning.
After a complex Wave iv consisting of a Double Zig Zag sitting just above a 38.2% retracement of Wave ii, we started to see a move to the upside(shown with the light blue arrow). This was a good signal to indicate that Wave v has now started to form.
Taking into consideration that Wave iii was well over 161.8% of Wave i, we expect to see Wave v, be a similar length to Wave i
AUDNZD – H4 Timeframe.
Rejected the double top we were looking at yesterday after a break of a flat top triangle on a lower time frame.
If we can stay below 1.08270, look for moves to 1.05700!
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