USD/JPY - H4
The pair registered a mixed week, as it erased gains from Wednesday's 4+ year-highs and dropped on Friday, but today it manages to attract buyers.
On Friday, we saw Covid-19 fears grappling markets and this benefited the Japanese currency more than the US Dollar, as this theme played against US bond yields and Fed tightening expectations. Earlier in the week though, solid US data and hawkish Fed rhetoric had helped the US Dollar to its highest level since March 2017 (114.79).
The overarching theme continues to be high inflation and monetary policy normalisation, which generally works in the pair's favor. This can lead to another push for 114.97, that will allow it to look towards 115.51, although conviction may prove elusive in the near term.
However, November is proving difficult for the pair, as it struggles to maintain its 3-month positive momentum, creating risk for another pullback. The broader 113.58-38 area provides significant support, as it contains the EMA200, the 23.6% Fibonacci and last month's lows.
At this stage, a breach of these levels seems to have a high degree of difficulty, but daily closes below it, can open the door for a deeper correction towards the next Fibonacci level and November's lows (112.71-58).
Past Performance: Past Performance is not an indicator of future results.
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.