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USDJPY Rallies after weak Japanese GDP

Market Analysis

USDJPY, Daily               

The USD continues its recovery (part 2)  USDJPY rallied briefly back above 114.00 today from the 112.86 low seen in the wake of Friday’s press conference after the Trump-Abe meeting, when the former said that “we will be on a level playing field soon” with exchange rates. The yen slipped today following a fundamental lead in the form of sub-expectations Japanese growth data, with Q4 GDP coming in at 1.0% y/y, shy of the median forecast for 1.0%. The q/q figure was 0.2% growth. USDJPY’s peak was 114.16, with the pair subsequently settling to the mid 113s, still leaving the pair showing about a net 0.4% gain on the day. A risk-on session in Asian markets was also conducive of a weaker yen.

The daily chart is also looking interesting again following all the fundamental announcements over the weekend and this morning’s news.  Friday candle and close was inconclusive and represented the news flow. However, earlier in the week the 111.70-112.50 support zone held and the floor for now looks to be the in.  The significant break of the 20 and 50 day moving averages today and the turn of the parabolic SAR from Friday, has prompted a long position form 113.60, Target 1 is the a multiple of the 14 day ATR and 50.0% Fibonacci level at 115.10 and target 2 is the 61.8 Fibonacci level and top of the Bollinger band at the psychological 116.00. The MACD has also crossed the 0 line and although the RSI remains neutral around 50, the momentum is positive and sloping upwards.

 A break of the support zone at 111.70 would likely see a further decline to 111.00 and the 200 day moving average at 110.40.

 

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Stuart Cowell

Senior Market Analyst

HotForex

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