14 Oct 2013
USD/JPY downwards as a resolution in US debt ceiling remains elusive
FXstreet.com (Athens) – The USD/JPY has been trading downwards today – having also opened with a large gap – as “risk – off” strikes back since the kick off of the early Asian trading session due mostly to the looming lack of a resolution to the US debt default.
USD/JPY tumbles as the Japanese currency outperforms on lingering US budget impasse
The USD/JPY opened with a lower gap the trading session and still trading on the downwards level amidst risk-off sentiment, inspired by the fact that US lawmakers failed to find a solution to the fiscal impasse during the weekend. Elsewhere, Nikkei in Japan as well as Hang Seng in Hong Kong are both closed for holiday today, which should bring thinner-than-usual liquidity conditions. The Japanese currency is currently gaining +0.30% against the greenback, dragging down the cross, as the risk-aversion environment is bolstering the safe-haven appeal status of the Japanese currency. Ahead of, there are also a lot of stop orders being placed in the area as of 98.70-99.10, therefore in case of being hit, the cross would probably move higher. Last but not least, the well known correlations are back; thus, the correlation between the Japanese currency index and the SP500 is approximately -0.81, so as long as SP500 futures continue the downtrend shift (today SP500 is trading sharply lower down 0.7%), traders should not find out-of the blue that the Japanese currency is outperforming across the board.
Technical Aspects on the USD/JPY
At the time of writing the cross is trading nearly 98.28, just 2 pips above the 50-daily MA (98.26), which provides solid support for the time being. Furthermore, looking upwards we could see as a resistance the 98.50 area, where the 100-daily MA is being found. Karen Jones, Head Technical Analyst at Commerzbank mentions that “USD/JPY continues to see a strong rebound from its 200 day ma at 96.94. Last week it was capped by the 50% retracement at 98.58 but last week’s rise looks directional. The six month resistance line at 99.72 is now being targeted. While a challenge of the top of the recent range at 99.72/100.62 is plausible we look for this to hold.”
USD/JPY tumbles as the Japanese currency outperforms on lingering US budget impasse
The USD/JPY opened with a lower gap the trading session and still trading on the downwards level amidst risk-off sentiment, inspired by the fact that US lawmakers failed to find a solution to the fiscal impasse during the weekend. Elsewhere, Nikkei in Japan as well as Hang Seng in Hong Kong are both closed for holiday today, which should bring thinner-than-usual liquidity conditions. The Japanese currency is currently gaining +0.30% against the greenback, dragging down the cross, as the risk-aversion environment is bolstering the safe-haven appeal status of the Japanese currency. Ahead of, there are also a lot of stop orders being placed in the area as of 98.70-99.10, therefore in case of being hit, the cross would probably move higher. Last but not least, the well known correlations are back; thus, the correlation between the Japanese currency index and the SP500 is approximately -0.81, so as long as SP500 futures continue the downtrend shift (today SP500 is trading sharply lower down 0.7%), traders should not find out-of the blue that the Japanese currency is outperforming across the board.
Technical Aspects on the USD/JPY
At the time of writing the cross is trading nearly 98.28, just 2 pips above the 50-daily MA (98.26), which provides solid support for the time being. Furthermore, looking upwards we could see as a resistance the 98.50 area, where the 100-daily MA is being found. Karen Jones, Head Technical Analyst at Commerzbank mentions that “USD/JPY continues to see a strong rebound from its 200 day ma at 96.94. Last week it was capped by the 50% retracement at 98.58 but last week’s rise looks directional. The six month resistance line at 99.72 is now being targeted. While a challenge of the top of the recent range at 99.72/100.62 is plausible we look for this to hold.”