Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
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Technical Update - USDJPY, EURJPY, GBPJPY & AUDJPY bouncing strongly. Likely resuming uptrends
Kim Cramer Larsson
Technical Analyst, Saxo Bank
Summary: JPY pairs have bounced strongly and seem set to resume uptrend. Break of June peaks is in the cards
USDJPY, GBPJPY and AUDJPY testing 0.618 retracement levels
EURJPY testing June peak
USDJPY has rebounded strongly from the 0.50 retracement just above the 100 and 200 Moving Averages to close to the 0.618 retracement at 142.08
Key question now is, will USDJPY break above 0.618 retracement and will RSI close back above 60 threshold. If that scenario plays out USDDJPY is likely to move to previous peak around 145.
If rejected USDJPY is likely to drop back below 140.
If USDJPY is taking out last week’s low at 137.23 an actual down trend would have been established with downside potential to 130.
On weekly chart USDJPY has bounced from its 21 and 55 Moving Averages and seems likely to resume uptrend.
Weekly RSI still positive sentiment with no divergence indicating likely higher levels above 145.
EURJPY has (similar to USDJPY) bounced strongly back from the 0.50 retracement to test June peak at 158. RSI is back above 60 threshold and if closing above EURJPY is likely close above 158 paving the way for higher levels.
1.382 projection at 159.80 is likely to be first target but a move to the 1.618 projection at 160.91 could be seen. EURJPY could test the upper rising trendline
To reverse this bullish scenario a close below 153.25 is needed.
GBPJPY correction has been minor compared to USDJPY and EURJPY. Bouncing from support at around 179.90 to back above the rising trendline, GBPJPY seems set for a move above 184. Currently testing 0.618 retracement at 182.28.
A close above is could fuel a move above 184 to the 1.618 projection at around 186.82 possibly testing minor resistance level at around 188.82 back from 2015!
A close below 179.450 will reverse the bullish scenario
AUDJPY has bounced from the 0.382 retracement and support at around 93.15, supported by the 55 daily Moving Average.
Uptrend has resumed and a bullish to June peak around 97.80 seems likely. A close above 96.85 and an RSI close back above 60 will further confirm the bullish picture.
A close below 93 and the lower falling trendline will reverse the bullish picture.
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