USD/JPY FIST Analysis: Can the pair move lower?
Updated
Hi traders, here's today's analysis of USDJPY. As usual, we'll cover all FIST components, including Fundamentals, Intermarket signals, Sentiment analysis, and Technical levels. All four components combined form our FIST trading strategy, as used by many institutional players.
FUNDAMENTALS:
Market Tone:
The USDJPY pair has been trading lower in a nice downtrend as US yields continue falling, most notably on the long end of the yield curve.
Market reports:
In the absence of major market reports from the US or Japan, yields could be a driving factor for the pair. However, volatility could ease without a major catalyst.
INTERMARKET:
Yields differentials and the Nikkei index failed to keep up with the sell-off in USDJPY. This could be a headwind for further weakness, just keep that in mind.
SENTIMENT:
CoT:
Leveraged funds have slightly increased both their longs and shorts in JPY, but the net position for the week is going up. The general bias is still bearish. However, we are falling from 1y+ extreme levels, and if funds decide to cover their shorts, there will be heavy buying pressure in the JPY.
Currency Strength Index:
The Japanese yen is closing the day as the second-best performing major currency, while the only currency weaker than the USD is CAD. Bearish sign for the pair.
Risk Sentiment:
Risk sentiment is rather mixed with the DAX, FTSE, and S&P 500 trading in the red for now. Asian indices are firm.
TECHNICALS
Price-Action:
The recent bearish trend came with strong projections to the downside, and some heavy selling volume around the 109.00 level.
== SUMMARY ==
A pullback to the 61.8% Fib level (around 108.60), which also aligns with a horizontal resistance area, could be an attractive level for sellers to go short. My overall bias is short unless conditions in the US yield curve and/or risk sentiment change.
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FUNDAMENTALS:
Market Tone:
The USDJPY pair has been trading lower in a nice downtrend as US yields continue falling, most notably on the long end of the yield curve.
Market reports:
In the absence of major market reports from the US or Japan, yields could be a driving factor for the pair. However, volatility could ease without a major catalyst.
INTERMARKET:
Yields differentials and the Nikkei index failed to keep up with the sell-off in USDJPY. This could be a headwind for further weakness, just keep that in mind.
SENTIMENT:
CoT:
Leveraged funds have slightly increased both their longs and shorts in JPY, but the net position for the week is going up. The general bias is still bearish. However, we are falling from 1y+ extreme levels, and if funds decide to cover their shorts, there will be heavy buying pressure in the JPY.
Currency Strength Index:
The Japanese yen is closing the day as the second-best performing major currency, while the only currency weaker than the USD is CAD. Bearish sign for the pair.
Risk Sentiment:
Risk sentiment is rather mixed with the DAX, FTSE, and S&P 500 trading in the red for now. Asian indices are firm.
TECHNICALS
Price-Action:
The recent bearish trend came with strong projections to the downside, and some heavy selling volume around the 109.00 level.
== SUMMARY ==
A pullback to the 61.8% Fib level (around 108.60), which also aligns with a horizontal resistance area, could be an attractive level for sellers to go short. My overall bias is short unless conditions in the US yield curve and/or risk sentiment change.
Please hit the "LIKE" button if you find this post useful. Also, don't forget to follow to get more trade ideas like this. Thanks!
Trade closed: target reached
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