Bottom line: USDJPY medium term outlook remain bearish against 112.22 levels. Bulls are testing resistance around 109.40/50 and might push further towards 110.00 before reversing lower again.

Fundamental Outlook:

NZDUSD managed to climb higher and push through 0.6443 levels yesterday, as the US Dollar continued to weaken against majors. With NFP to be out tomorrow, NZDUSD may continue higher as further 8 million jobs are expected to be lost in May. If the Reserve Bank of New Zealand decides to implement “negative interest rate policy”, NZDUSD may come under pressure, going forward.

SPX500 managed to clock yet another day in the Green closing at 3122, a gain of +1.36%. Futures pushed through 3131 highs yesterday and are seen to be cooling off a bit now at 3112 mark. The NASDAQ inches closer to all-time highs indicating almost a V-Shaped recovery.

Optimism over Fed measures and a V-shaped economic recovery has led to the risk in Risk-Assets as investors continue to remain hopeful despite the rising tensions among the world’s largest economies US and China. Adding further are the rising protests in US over the killing of George Floyd.

USDJPY has risen sharply over the last few trading sessions and is back above the 109.00 mark. This was natural as the anti-risk Japanese Yen continues to loose against risk sentiment. This could easily reverse though, if COVID-19 infections burst over the next few days.

Technical Analysis:

USDJPY bulls have managed to remain in control over the past few sessions as the currency trades comfortably above 109.00 mark. It is expected to test 109.40 and subsequently 110.00 resistance before reversing lower again. Bottom line remains that USDJPY should stay below 112.22 resistance to keep the above bearish structure intact.

USDJPY had earlier dropped from 112.22 through 101.20 levels, carving a meaningful down swing. It was later retraced by a corrective rally towards 111.75 before reversing lower again. Hence, immediate price resistance stays at 111.75, followed by 112.22 respectively. Also note that 110.00 is fibonacci 0.618 retracement of the recent drop between 111.75 and 107.00 respectively. High probability remains for a bearish reversal from there.

Traders might be preparing to sell again around 109.40 and 110.00 levels, with protective stops above 112.22 and projected targets below 101.50, going forward.

Prepared by

Harsh Japee, Technical Analyst.

USDJPY Chart

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