Is USDJPY Eyeing A Fresh Breakout?
Dollar Pushing Higher Again
USDJPY is pushing higher again today with the YTD highs now only around 0.6% above market. A fresh rally in USDH is helping lift the pair again today as the greenback continues to draw safe-haven inflows amidst the ongoing conflict in Iran. US and Israel continue to mount air strike son Iran which has continued to retaliate. As such, there is little sign of the conflict ending soon, despite Trump earlier this week signalling that the operation could soon be complete. While the violence continues, USDJPY looks vulnerable to further upside.
US Inflation Due
Looking ahead today, traders will also be watching the latest US inflation data. Annualised CPI is expected to hold steady at 2.4%. Any upside surprise today should help drive USD higher again near-term, feeding into the hawkish shift we’ve seen in traders’ Fed expectations recently. The surge in energy prices raises the risk of fresh inflationary pressures which should keep the Fed from easing furtehr near-term. Indeed, if the conflict drags on longer than currently seen (up to eight weeks), USD could start to push more firmly higher as inflationary risks become more entrenched.
BOJ Intervention Risks
The obvious risk for USDJPY, however, is that we see fresh intervention from Japanese authorities if price continues higher. Japanese officials have previously been very vocal around current prices and their lack of comment so far suggests they are monitoring risks from the Middle East crisis for now as any intervention could prove futile in the wake of a fresh escalation in the conflict.
Technical Views
The rally in USDJPY has seen the market breaking back above the 1576.85 level. With momentum studies bullish, focus is on a continuation higher with 161.95 and the bull channel highs the next objective for bulls. If we correct lower at any point, 154.65 will be the key support to watch, with the channel lows below too.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% and 73% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.