FX Technical Highlights: JPY trying to find support FX Technical Highlights: JPY trying to find support FX Technical Highlights: JPY trying to find support

FX Technical Highlights: JPY trying to find support

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  Mostly weak developments in the major FX pairs this week, but we zoom in on next week's focus points: whether the JPY may have bottomed out, whether the GBP has been overachieving a bit, the frustrations for EURUSD traders, and noting that it is a possibly pivotal week for the NZD over the RBNZ meeting next Wednesday.

A few highlighted charts as a fairly inconclusive week draws to a close, particularly disappointing, given that this was FOMC meeting week. 

USDJPY – JPY crosses possibly pivotal after bond market consolidation
The JPY may have bottomed out here if the sharp consolidation in global bond markets has done likewise, and if equity markets roll over and jaw dropping complacency in risk conditions mean reverts, it could add a bit of energy to a fresh bout of JPY strength. Already we are seeing signs of the momentum rolling over in USDJPY if we have a look at a simple slow stochastic momentum indicator, although the entire recent backup above 107.00 took has neutralized the downtrend until a more significant sell-off (starting with move below 106.00 proves otherwise). USD and JPY may track one another in crosses if both serve as safe haven currencies as they have done in tandem in the past. Overhead, the 109.00 level is the clear major level that will coincides with the established range and soon the 200-day moving average.

Source: Saxo Bank

EURJPY - downtrend more intact
EURJPY presents a rather different picture in the wider context than USDJPY, still firmly in a downtrend and not having yet violated a trend measure like the Ichimoku cloud (daily) as shown on the chart below. Bears have a clear risk/reward level around the 120.00 for maintaining a downside bias.

Source: Saxo Bank

EURUSD weekly - what a fizzle!
Last week's EURUSD weekly candlestick was somewhat compelling for bulls, offering a virtual outside bar reversal. But despite this week following on from the ECB meeting and this week's FOMC meeting and USD funding panic, the trading range has been microscopic and indeterminate this week - daily closes solidly below 1.1000 or above 1.1100 are on the agenda next week for establishing direction.

Source: Saxo Bank
GBPUSD - 1.2500 remains pivotal
We're still awaiting the decisive Brexit developments that clear up the situation beyond the next five minutes, while this week has re-established that 1.2500 is a critical area for cable, as the attempt above over the last couple of sessions was firmly rejected today. 1.2300-25 looks like the first tactical support area on consolidation.
Source: Saxo Bank

AUDNZD - quick recovery, now for the RBNZ
A smart recovery today in AUDNZD after the sharp mid-week consolidation on a weak Australian GDP report. The next test of this, one of the most well-organized trends in FX at the moment, comes over next Wednesday's RBNZ meeting to see if we can maintain momentum for a try toward 1.1000 and even the  upper reaches of the range to 1.1175 (the prior major high) and beyond. The RBNZ may have to deliver a dovish surprise, given that the rate spreads have reversed against the AUD's favor a bit this week.

Source: Saxo Bank

NZDUSD - new local low - next major one very close
NZDUSD is looking to close the week on a weak note and at its lowest level for the cycle. There is another major chart point a bit lower still, the low from late 2015 around 0.6235, though we are already trading below the lowest weekly close at 0.6285, a close below which will make the lowest weekly close since 2009.

Source: Saxo Bank

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.