Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank
USDJPY has rebounded from its 0.786 retracement at 151.75.
The strength indicator RSI is still showing positive sentiment with no divergence. That is a strong suggesting USDJPY is to rebound higher. An RSI close back above 60 threshold will confirm the bullish rebound picture.
A bullish move over the next couple of weeks to the 0.618 retracement at 157.05 is in the cards.
However, according to RSI USDJPY could move to the 0.786 retracement at around 158.46 i.e., at around previous high close.
A break below 151.75 is demolishing the bullish rebound scenario and likely to push USDJPY down to support at around 150.80, possibly down to 149.20.
GBPJPY closed below the 0.786 retracement last week but found support at the lower rising trendline.
Similar to the other JPY crosses the strength indicator RSI is still showing positive sentiment with no divergence strongly suggesting GBPJPY will rebound higher.
A bullish Engulfing bottom and reversal candle is in the making and if closing above 192.60 it will be confirmed.
A bullish move to the 0.618 retracement at 197.10 would tehn be in the cards. However, a bullish move to the 0.786 retracement at 198.66 is also a possibility.
A break below 191.35 will most likely push GBPJPY down to strong support at around 190.