Tuesday, October 30, 2018

USD/JPY - 30 October 2018


Fundamental Highlights

The Dollar/Yen deviates away from US stock indices by trading higher as traders prepare for a dovish Bank of Japan Monetary Policy Statement. Signs of a correlation shift between the yen pair and US equities are starting to show up as the currency’s movement shift from a safe haven like movement to a monetary policy economics movement. What we are trying to say is that although US stock indices are falling, the Dollar/Yen has not pushed lower signaling a lack of responsiveness from the currency’s safe haven attribute. Instead, the currency is responding to monetary policy fundamentals. Near the end of the day, the Bank of Japan is set to release their monetary policy statement for October and traders are already pricing-in the idea that the BoJ’s tone will remain dovish. The rationale here is that global market volatility is at extreme highs, and the BoJ will not be willing to take a risk in such environment.

Technical Analysis

The pair rises and breaks above all three major moving averages representing a shift in the trend bias of the pair. The break above the moving averages mean that the bias of the USD/JPY pair has turned bullish. Currently, prices are sitting at a key resistance level and it is important to note that this level has been rejected three times this month and a break this time will yield a massive influx of buyers pushing prices towards the next resistance level at 113.78. The break of this level will be confirmed when prices breach the 113.08 mark.

Support: 112.56 / 112.16
Resistance: 113.08 / 113.78

Chart (H4)