10 Oct 2013
USD/JPY soars on Nikkei, solid data and short-covering
FXstreet.com (Athens) – The USD/JPY has been trading upwards since the kick off of the Asian trading session due mostly to the solid Japanese data released pertaining to machinery orders as well as on the Nikkei uptrend movement.
USD/JPY trades upwards on short-covering, Nikkei; 98 seems to be next target
Apart from the last couple of hours, the cross has been trading significantly higher since the early Asian trading session. Despite we are still amidst the US default impasse it seems that there is a wide underlying expectation that both US issues (government shutdown as well as debt-ceiling raising) will be sorted out simultaneously even at the 12th hour. Thus, risk-on sentiment strikes back and Japanese crosses move higher. Apart from the positive wide expectation on the US debt default– which hit the “snooze” button to the risk-aversion mode – the cross is also trading higher today due to the solid machinery orders released in Japan but also to the stops being hit around the 97.35 area (due to short-covering). Traders should take upon great consideration if the move is just a corrective bouncing or a change into a bullish shift trend. Last but not least, Nikkei is up 0.53% and as it widely known there is a heavy negative correlation between the Japanese currency and the Nikkei index, as it is more than plausible that when Nikkei is up the risk-sentiment is “on”, therefore the Japanese currency loses significantly its safen haven appeal.
Technical Aspects and Strategic Bias
Karen Jones, Head Technical Analyst at Commerzbank mentions that USD/JPY is bouncing higher following its test of its initial target of the 200 day ma at 96.78. We are alert to the increased possibility of a break lower. The short term resistance line offers initial resistance at 97.92 ahead of the 100.62 September high then 101.54/60 July high and the Fibonacci retracement.” Our personal aspect of view is that while the pair is showing an uptrend momentum we should read between the lines, to realize if it is more than a corrective bouncing or a really change in a bullish trend shift as depicted above. Traders interested in realizing such a trend should focus on the area as of 97.76-98.08 (low of as18th September and high as of the 10th
October) and more importantly between 97.90-98.10. If the pair manages to overcome the barrier of the 97.90-98.10 levels, the it might be seen more like a bullish trend than a corrective bouncing.
USD/JPY trades upwards on short-covering, Nikkei; 98 seems to be next target
Apart from the last couple of hours, the cross has been trading significantly higher since the early Asian trading session. Despite we are still amidst the US default impasse it seems that there is a wide underlying expectation that both US issues (government shutdown as well as debt-ceiling raising) will be sorted out simultaneously even at the 12th hour. Thus, risk-on sentiment strikes back and Japanese crosses move higher. Apart from the positive wide expectation on the US debt default– which hit the “snooze” button to the risk-aversion mode – the cross is also trading higher today due to the solid machinery orders released in Japan but also to the stops being hit around the 97.35 area (due to short-covering). Traders should take upon great consideration if the move is just a corrective bouncing or a change into a bullish shift trend. Last but not least, Nikkei is up 0.53% and as it widely known there is a heavy negative correlation between the Japanese currency and the Nikkei index, as it is more than plausible that when Nikkei is up the risk-sentiment is “on”, therefore the Japanese currency loses significantly its safen haven appeal.
Technical Aspects and Strategic Bias
Karen Jones, Head Technical Analyst at Commerzbank mentions that USD/JPY is bouncing higher following its test of its initial target of the 200 day ma at 96.78. We are alert to the increased possibility of a break lower. The short term resistance line offers initial resistance at 97.92 ahead of the 100.62 September high then 101.54/60 July high and the Fibonacci retracement.” Our personal aspect of view is that while the pair is showing an uptrend momentum we should read between the lines, to realize if it is more than a corrective bouncing or a really change in a bullish trend shift as depicted above. Traders interested in realizing such a trend should focus on the area as of 97.76-98.08 (low of as18th September and high as of the 10th
October) and more importantly between 97.90-98.10. If the pair manages to overcome the barrier of the 97.90-98.10 levels, the it might be seen more like a bullish trend than a corrective bouncing.