Tuesday, August 6, 2019

USD/JPY - 06 August 2019


Fundamental Highlights

The Dollar/Yen reversed higher during the Asian session after testing the lowest level, 105.50, since early January flash crash, and rallied over 150 pips as traders booked profits. Modest rebound in the US Treasury bond yields, which improved risk sentiment, extended some support to the US Dollar and collaborated to the pair’s strong intraday recovery. However, it remains to be seen if the current up-move is back by any genuine buying or turns out to be a bounce from an extremely oversold conditions, as traders should keep in mind that the risk is still out there, amid renewed US-China trade war fears. Furthermore, the US Treasury labeled China a currency manipulator after the Chinese central bank let the Yuan depreciate, denting the global risk sentiment even further. Thus, traders should wait for a strong bullish follow-through before confirming that the pair might have actually bottomed out in the near-term.

Technical Analysis

The Dollar bounced from yesterday’s support level, 105.50, as traders booked profits from these extremely oversold conditions, after a strong reversal that started from 109.20s. The bulls need to break above 107 to likely confirm further upside move. The bears on the other hand, are still in control and they are looking to retest yesterday’s low. A break below 105.50, would accelerate further weakness and push price towards the yearly low 104.70.

Support: 105.85 / 105.50
Resistance: 106.50 / 106.80

Chart (H4)