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USD/JPY Trends To The Bear: U.S. Overnight Preview

Posted Tuesday, February 13, 2018 by
Shain Vernier • 2 min read

Whipsaw trading has defined the U.S. session, with the DJIA and S&P 500 both near flat after negative opens. The USD has posted mixed performance against the majors, highlighted by extensive losses against the safe-havens. Don’t look now, but risk-off is gaining steam on the currency markets.

The Economic Calendar For The U.S. Overnight Session Is Loaded.

Expect considerable volatility facing a broad-spectrum of global currencies in the coming 18 hours. Here are the key events:

Country                              Event

Australia                            Westpac Consumer Confidence (Feb.)

Japan                                  GDP (Q4)

China                                  Foreign Direct Investment (Jan.)

New Zealand                     RBNZ Inflation Expectations (Q4)

Eurozone                           HICP (Jan.), GDP (Q4)

U.S.                                     CPI (Jan.), Retail Sales (Jan.)

There are a number of market movers in this group of metrics. The Eurozone GDP and U.S. CPI will bring EUR/USD valuations to the forefront. China’s FDI stats are going to be watched closely by investors looking for drivers of the recent volatility in U.S. Treasuries. All in all, it is going to be an active period on the forex.

USD/JPY Technicals

One of the markets that has been trending hard today is the USD/JPY. A bit earlier in the session, 2017’s low withstood a firm challenge.

USD/JPY, Daily Chart

Upon the break beneath macro support at 108.94, this market has trended downward with vigor. Similar fashion to the Swiss franc, the yen is becoming a desired asset for investors with a waning risk appetite.

Overview: For now, the level to watch is 2017’s low of 107.31. Today’s intrasession low of 107.41 serves as a proximity test of this level. I expect bearish consolidation and further probing of the 107.31-107.41 area. In the event that a compression pattern becomes apparent, a short breakout trade beneath 107.31 will become a high probability entry.

Of course, like all things trading, patience is a virtue. We need further confirmation that 2017’s low is a valid support level. Another firm test and rejection will lend credence to the breakout scenario.

Until then, check out the signals page and be sure to account for risk ahead of tonight’s active economic calendar.

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