Support In View For The USD/JPY - Forex News by FX Leaders

Support In View For The USD/JPY

Posted Friday, October 18, 2019 by
Shain Vernier • 2 min read

It has been another brutal session for the Greenback, featuring losses across the majors. Downturns vs the EUR, GBP, Swiss franc, and in the USD/JPY have highlighted the action. As we close in on the 30 October FED meeting, currency players are dumping the USD in favor of more attractive alternatives. 

For the past few weeks, it has looked like a FED rate hike on October 30th was a foregone conclusion. This continues to be the case, as the odds of a ¼ point reduction sit at 89.3% according to the CME FEDWatch Index

The prime beneficiaries of today’s action have been the safe-haven currency pairs ( USD/CHF , USD/JPY). For the moment, traders are happy to take exposure to U.S. assets, both equities and the Greenback, off the board.  

USD/JPY Closes In On Fibonacci Support

If the USD/JPY closes in the red today, it will mark the first three-day losing streak of October. Of course, the losses have been minimal and rates are still slightly up on the week.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Here are two key levels to watch in this market for the coming sessions:

  • Resistance(1): August High, 109.31
  • Support(1): 38% Current Wave Retracement, 107.99

Bottom Line: Despite the recent weakness, the daily uptrend in the USD/JPY remains valid. And, as long as the Swing High (108.93, not pictured) is the intermediate-term top, buying a pullback isn’t a terrible idea. Until elected, I will have buy orders ready to go from 108.09. With an initial stop at 107.73, this trade produces 36 pips on a standard 1:1 risk vs reward ratio.

If you are going to become active in the USD/JPY, keep a close eye on Monday’s Import/Export and Trade Balance (Sept.) data from Japan. Projections are for these numbers to improve significantly over August. Also on Monday, the People’s Bank of China is set to issue its Interest Rate Decision. In the event the PBoC goes rogue, be on the lookout for volatility to sweep through the forex.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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