ridethepig | JPY Market Commentary 2020.04.15
Updated
A good time to update the USDJPY chart as things are changing very quickly. Here you will notice risk-sentiment starting to take another turn for the worse, meaning we are again entering into a very advanced playing field and a short-term nimble approach is pragmatic and necessary to survive at these levels.
The relentless stream of bad news on the virus front keeps coming and another round of bankruptcies looks set to take charge across the board…. It is entering into the picture as lockdowns in Europe and US look set to extend till June/July which will squeeze Small & Medium sized firms that wont be able to survive for much more than a couple weeks.
A few of scenarios we need to track on the Fundamental side:
1️⃣ Bullish Case - Northern Hemisphere curve flattening with US and Europe opening early June. Will trigger direct legs back towards all time highs across the board in Equities. (22% odds)
2️⃣ Inline Case - US and Europe opening in July with clear preparations for further rounds of social distancing programs that will come into play again at year-end through Q1 2021 as the virus migrates back in the Winter months. Opens up another calculated leg down in risk markets to sweep the current floor in place and early buyers. (64% odds)
3️⃣ Bearish Case - How fast the consumer comes back and managing these expectations is the one to track and it boils down to whether people have the confidence to return to hotels, travel, shops, bars, restaurants etc… If ‘business as usual’ does not return as masses remain afraid then we can enter into a depression (14% odds)
For the technical flows... over the coming session all eyes are on the key 107.0x support !! ... After it managed to hold todays London and NY sessions it is screaming loudly that USD demand remains prevalent and shows no signs of abating. Initial targets over the coming sessions at 108.3x and 109.3x, to the downside invalidation of the view will come from a breach of 106.9x as it will trigger a momentum move that is also very tradable towards 104.5x.
We will have fresh round of DXY and other G10 chart updates coming tomorrow, highly recommend all digging into the details of the flows as the ranges are very wide. Thanks as usual for keeping the support coming with likes, comments, charts and etc!
The relentless stream of bad news on the virus front keeps coming and another round of bankruptcies looks set to take charge across the board…. It is entering into the picture as lockdowns in Europe and US look set to extend till June/July which will squeeze Small & Medium sized firms that wont be able to survive for much more than a couple weeks.
A few of scenarios we need to track on the Fundamental side:
1️⃣ Bullish Case - Northern Hemisphere curve flattening with US and Europe opening early June. Will trigger direct legs back towards all time highs across the board in Equities. (22% odds)
2️⃣ Inline Case - US and Europe opening in July with clear preparations for further rounds of social distancing programs that will come into play again at year-end through Q1 2021 as the virus migrates back in the Winter months. Opens up another calculated leg down in risk markets to sweep the current floor in place and early buyers. (64% odds)
3️⃣ Bearish Case - How fast the consumer comes back and managing these expectations is the one to track and it boils down to whether people have the confidence to return to hotels, travel, shops, bars, restaurants etc… If ‘business as usual’ does not return as masses remain afraid then we can enter into a depression (14% odds)
For the technical flows... over the coming session all eyes are on the key 107.0x support !! ... After it managed to hold todays London and NY sessions it is screaming loudly that USD demand remains prevalent and shows no signs of abating. Initial targets over the coming sessions at 108.3x and 109.3x, to the downside invalidation of the view will come from a breach of 106.9x as it will trigger a momentum move that is also very tradable towards 104.5x.
We will have fresh round of DXY and other G10 chart updates coming tomorrow, highly recommend all digging into the details of the flows as the ranges are very wide. Thanks as usual for keeping the support coming with likes, comments, charts and etc!
Note
Tracking closely the support here.... Note
First test... a break will be disastrous for buyers. Order cancelled
Note
Risk dynamics are once again the only thing we need to 🔎 … The overall picture is pretty ugly for risk and USDJPY, I am turning bullish on JPY and expecting a renewed bout of demand over the coming sessions - a break of the 107 support will get my attention and trigger a spike towards 106.2x below. To the topside, invalidation of the bearish view only comes with a break of strong resistance located at 108.2x.
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