Short term
Trade view / 28 February 2018 at 1:11 GMT

USDJPY shows signs of corrective recovery potential

Managing Director / Technical Research Limited
New Zealand
Instrument: USDJPY
Price target: ¥108.67
Market price: ¥107.30

USD rallied across the board on Tuesday following Fed Chair Jerome Powell’s appearance before a Congressional committee. However, late in the session, the stock market sold off and bond yields gave back some of their gains. That left USDJPY little changed on the day.
Attention now turns to Thursday’s inflation update. Headline PCE at 1.7% and core PCE at 1.5% are expected to hold steady on last month’s reading, on an annual basis. The month-on-month numbers will be up significantly, but base effects – high numbers from 12 months ago dropping out of the annual calculation – explain no movement in the year-on-year numbers. However, even a marginal beat on forecasts would boost the dollar.
Later on Thursday, Powell testifies before a Senate committee, giving him a chance to “clarify” any misinterpreted comments that he may have made yesterday.

Management and risk description

The US dollar’s rally from ¥105.55 (near trend channel support) still appears incomplete, with the opportunity for a C-Wave rally onto new recovery highs, with Wave-c equalling Wave-a at ¥108.75 (see daily chart below).

Exhaustion of this rally would then point to the resumption of downtrend. As always, the market will “tell us". 


Entry: US dollar is seen as a Buy at ¥107.35/¥107.20 today.

Stop: just below ¥107.00, initially.

Target: ¥108.67.

Time horizon: allow a few days for target to be met

Daily USDJPY chart (click to expand)
USDJPY daily chart

Source: ThomsonReuters

Weekly USDJPY chart (click to expand)
USDJPY weekly chart

Source: ThomsonReuters. Create your own charts with SaxoTrader; click here to learn more

For more on forex, click here.

— Edited by Robert Ryan

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Patto Patto
Other chartists say a multi-month rectangle had formed on USDJPY daily chart. It broke out under it a few days ago and is now retesting the rectangle support line (prior to another leg down). Let's see...
Max McKegg Max McKegg
My Call is Elliott Wave based, a small risk for much greater reward potential
AlexF AlexF
sudeen drop in US500 globex any news out there ? easy profit again today on it but curious any news ?
AlexF AlexF
In on USDJPY 107.09 but also dropped suddenly from 107.36
AlexF AlexF
Looks like USD on its way up many are shorting gold since powell yesterday
Max McKegg Max McKegg
yes, needs to hold recent intra day low and start rallying for this very short term trade to be bear fruit
AlexF AlexF
lets see.....US500 globex coming back to 2750 and USDJPY off lows....I m having far shorter target on USDJPY just to 107.5


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