Japanese Yen, British Pound Rally. USD/JPY Ready to Extend Losses?


Japanese Yen, USD/JPY, British Pound, S&P 500, Nasdaq – Asia Pacific Market Open

The anti-risk Japanese Yen gained over the past 24 hours despite a broadly optimistic day in global financial markets. Germany’s benchmark stock index, the DAX 30, gained 0.67%. In the United States, the S&P 500 closed 1.64% higher while the tech-heavy Nasdaq Composite soared 2.56% in its best day since early September. The haven-oriented US Dollar cautiously weakened.

Gains in equities may have been due to rising hopes of fiscal stimulus in the world’s largest economy. Yet again, the best-performing stocks were concentrated in large tech players such as Apple and Amazon. Earlier in the session, RBC Capital Markets raised its target on Apple shares to $132 from $111. Shares in Amazon rallied ahead of its Prime Day, an annual savings event for its subscribers.

Weakness in the Japanese Yen could perhaps be explained by profit-taking for those who have been short since late September. Another currency that outperformed was the British Pound. Sterling might be receiving a boost as investors bet on a Brexit deal. Boris Johnson’s spokesman, James Slack, said earlier today that the nation is committed to working hard this week on an agreement with the EU before the October 15th deadline.

JPY Forecast

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Tuesday’s Asia Pacific Trading Session

Futures tracking equities on Wall Street are pointing cautiously higher heading into Tuesday’s Asia Pacific trading session. That could point to a ‘risk-on’ tone ahead, offering support to the sentiment-linked Australian and New Zealand Dollars. The former will be closely eyeing incoming Chinese trade data. China is Australia’s largest trading partner. As such, economic news flow from the former can at times domino into the latter.

Japanese Yen Technical Analysis

USD/JPY may be readying for its next leg lower as it trades within a bearish Descending Triangle chart pattern. The pair confirmed a turn lower at the ceiling of the triangle as it closed lower, placing the focus on the 105.10 – 105.30 inflection zone. A subsequent push lower exposes the floor of the triangle between 104.18 and 104.00. The emergence of a bearish Evening Star further underscores a downside technical scenario.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 9% 1% 5%
Weekly 13% -18% -4%

USD/JPY – Daily Chart

Japanese Yen, British Pound Rally. USD/JPY Ready to Extend Losses?

Chart Created in TradingView

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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