Risk has had a great week to the Yen, has supply started to appear?

ตุลาคม 18, 2019
by Joseph Jeffriess, Market Analyst

Article Recap

Gains from major risk currencies to the JPY so far this week;

• AUDJPY +0.96%
• EURJPY +1.22%
• GBPJPY +2.29%

It’s been a rough week for the Yen as traders continued to move out of the safe-haven and back into risk currencies. The USD has also seen a positive week but hasn’t seen the buyer interest that the AUD, GBP and EUR have seen this week.

Brexit, this has been a key driver throughout the week as it looks more and more possible that the EU and UK can reach an agreement and smooth exit for the UK from the union. This has led to strong gains on the EUR and GBP across the boards. The GBPJPY hit 141.50 overnight (5-month highs), and the EURJPY moved back into the 121 Handel. (3-month highs)

The trade deal has been another factor adding to buyer support. The AUDJPY which has been riding high after phase one of the trade deal was given another boost in yesterday’s session after jobs data showed better than expected creation and a slight drop in unemployment. The figure looks to have taken some expectation off further rates cuts in November.

Taking a look at the three major risk majors to the JPY on the their daily charts, we can see some supply starting to develop;

AUDJPY – Price remains in a medium-term uptrend after buyers confirmed the higher low on the 10th this month. Yesterday’s rally has returned price to Septembers high. This level also lines up with what is starting to look like a supply zone from 74.35 to 74.90. If sellers can continue to hold buyers back this area could overwhelm and start a new move lower. Buyers need to hold current level or break above the area to cancel it out.

EURJPY – buyers had a great run over the last two weeks, after holding the higher low on the 9th of this month its been oneway traffic with only a minor pause on the 14th. In Tuesday’s session, buyers broke above a resistance point that had stood since August. Overnight the rally was trimmed after making new 3-month highs. The high point lines up with potential supply that’s devaloping from 120.88 – 121.37. Buyers need to break above this range to cancel it out, otherwise, we could see sellers continue to develop numbers and start a new short-term decline.

GBPJPY – was the best performing major to the JPY this week continuing its incredible advance adding 298 pips after last weeks 4.51% gain. Buyers have been far from in total control in the last two sessions, pulling back a deep selloff and failing to hold at new 5-month highs overnight. Price has been extremely volatile and reactive to ongoing updates coming out regarding Brexit. Price-wise we’re watching a potential supply area from 141.20 – 142.85. This area is less developed than seen on the other charts and traders should be wary of any shorts due to the current volatile nature of price atm. We would like see a possible second failed rally to start showing sellers are massing in numbers.

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