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.
BlackBull Markets has partnered up with Interac, enabling Canadian Clients an easy way to fund their trading account at BlackBull Markets directly from their Canadian bank account.
Indices across the board sold off today, making it the 5th session in decline as many investors and traders take high valuations as a good time to take profits. The NASDAQ is down the most in the past couple of sessions, as investors rotate out of an overcrowded “big tech” trade, down around 7%. The S&P 500 and the Dow Jones are down 2.5% and 0.6%, respectively.
We can see that WTI recently broke a Double Top. The next candle made a strong retracement back to a small support around 61.500 a barrel.
Ideally, we want this candle to close as a strong Bullish Candle to look for further moves to the upside.
Here we can see that AUDCAD has started to move into two converging lines forming a Symmetrical Triangle.
Wait for a break of this pattern for a potential move. This could happen as we approach the UK open.
Within an Elliott Wave Cycle. Currently, it seems that we have finished Wave 2 of Wave (v) after a 61.8% Fibonacci retracement of Wave 1 it made a strong move to the upside.
Using a Fibonacci Expansion, look for wave 3 to reach 100% to 161.8% of wave 1.
A strong downtrend creating a clean path back up. We can now see a Flat Top Trinagel being broken to the upside.
If it stays above 1.6200 Look for a Potential Target at about 1.67348
Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921).
We are also registered with the Financial Services Provider Register (number: FSP403326).
Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 485
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
All payments related to the Paysafe Group are facilitated by Black Bull Group Limited.
Copyright © 2021 Black Bull Group Limited. All Rights Reserved.