Morning Preview: Just How Far Can the USD/JPY Rally?
Rowan Crosby • 2 min read
U.S. equity markets hit back hard overnight, with the SPX hitting a record high. We are just shy of the 2500 level, and there’s every chance we might test that in Wednesday’s trade.
The safe havens have continued to decline, with the USD/JPY as one of the notable movers in the last few days. Gold has also pulled back and is now looking like it might be offering a good opportunity for those looking to hedge against any further tensions with North Korea.
The big story on the forex front has to be the continued rise of the GBP. As I suggested in yesterday’s signals brief, there was every chance that we would test the highs and break out if we put up some decent CPI numbers. That was exactly what happened, and the GDP/USD smashed through overhead resistance.
The pound will continue to be in play as we look to Thursday's BOE interest rate decision with a possible rate raise.
Economic Data at a Glance
AUD – Westpac Consumer Sentiment
EUR – German and Spanish CPI, Industrial Production
CHF – PPI
GBP – Employment Data
USD/JPY – Yen Looking to Test Resistance
One of the stories of the day is the turnaround in the Yen since last Friday. Traders were really buying up the safe havens ahead of the weekend, but we’ve seen a complete 180.
The USD/JPY is now rallying strongly and once again 109 holds up. The next level that I’m looking for is a test of 110.50. Be looking to buy ahead of this level with an exit on the other side. I expect there is a strong chance to break through given the upside momentum.
USD/JPY- 240 min Chart