FX Breakout Monitor: USDJPY breaks higher FX Breakout Monitor: USDJPY breaks higher FX Breakout Monitor: USDJPY breaks higher

FX Breakout Monitor: USDJPY breaks higher

Forex 5 minutes to read
John Hardy

Head of FX Strategy

Summary:  Today we are looking at USD strength as USDJPY pushes clear of 110.00 and EURUSD dips below 1.1300 again.

For a PDF copy of this edition, click here.

A bit more drama than we normally see on a Monday today as the USD moved a bit more decisively than last week in USDJPY terms, slicing more forcefully up through the 110.00 level and following through on the prior attempts at that level.

That chart is a particularly challenging one given the large-scale sell-off from which the pair is retracing and general feeling that JPY could change character rapidly if global risk assets lurch back into risk off mode, although JPY tends to have at least one eye on bond yields as well.

Elsewhere, the USD break to the upside becomes more complete if EURUSD can push more forcefully through 1.1300 than it did intraday today. That marks the sixth foray below that level for this cycle since the first one back in November.

Breakout signal tracker

The AUDUSD downside breakout is one worth looking into, but we are already short AUD in AUDCAD and may prefer to have a look at an NZDUSD short in the even of a break lower after the Reserve Bank of New Zealand tomorrow night (very early Wednesday in Asia). We are also waiting to add EURUSD to our breakout signal tracker. 
Breakout signatures
Source: Saxo Bank
Today’s FX Breakout monitor

Page 1: USDJPY traders were shown a fresh breakout again today, while USDCHF joins in with the same, albeit after an odd mini-flash crash in CHF overnight.

EURUSD would register a new 19-day low close and breakout on a close below 1.1304 today, though we’d like to see a solid clearing of 1.1300. We also watch AUDUSD and AUDCAD for fresh follow-up lower after the break lower on Friday for AUDUSD and mid-week last week for AUDCAD.
FX Breakouts
Source: Saxo Bank
Page 2: NOK joins SEK in the race to the bottom here, as a weak CPI print saw a fresh 19-day high in EURNOK. We’re reluctant to see this as a notable development as it the break occurs against the prior huge sell-off wave from above 10.00. SEK pairs face a key test on Wednesday with the Riksbank meeting, which could provide pivotal guidance.

Emerging markets are quiet here, and still remarkably calm given broadening USD strength. Some EM have softened so we could be setting up for a trend change in places there on continued USD strength and particularly if risk appetite rolls over more thoroughly than it did late last week – stay tuned.
Source: Saxo Bank

USDJPY decided to follow through higher after last week's hesitant prior move through 110.00. It’s a tough call here locally for traders weighing the local bullish action against the prior deep sell-off from around 114 to below 108. The next test, perhaps, will be up into the 200-day moving average above 111.00.
Source: Saxo Bank

AUDUSD managed a new 19-day low close on Friday, with trend traders perhaps reluctant to pile on right away given that we are still very much mired in the range stretching back many months.

Our operating assumption is that the intraday spike lows from the early January flash crash in JPY pairs (that triggered a spike in AUD pairs as well) is a “false” low and that the real downside break level is the 0.7000 area, or nominally the low close for the cycle at 0.6985.
Source: Saxo Bank

REFERENCE: FX Breakout Monitor overview explanations

The following is a left-to-right, column by column explanation of the FX Breakout Monitor tables.

Trend: a measure of whether the currency pair is trending up, down or sideways based on an algorithm that looks for persistent directional price action. A currency can register a breakout before it looks like it is trending if markets are choppy.

ATR: Average True Range or the average daily trading range. Our calculation of this indicator uses a 50-day exponential moving average to smooth development. The shading indicates whether, relative to the prior 1,000 trading days, the current ATR is exceptionally high (deep orange), somewhat elevated (lighter orange), normal (no shading), quiet (light blue) or exceptionally quiet (deeper blue).

High Closes / Low Closes:
These columns show the highest and lowest prior 19- and 49-day daily closing levels.  

Breakouts: The right-most several columns columns indicate whether a breakout to the upside or downside has unfolded today (coloured “X”) or on any of the previous six trading days. This graphic indication offers an easy way to see whether the breakout is the first in a series or is a continuation from a prior break. For the “Today” columns for 19-day and 49-day breakouts, if there is no break, the distance from the current “Quote” to the break level is shown in ATR, and coloured yellow if getting close to registering a breakout. NOTE: although the Today column may show a breakout in action, the daily close is the key level that is the final arbiter on whether the breakout is registered for subsequent days.


The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research 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 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. To the extent that any content is construed as investment research, you must note and accept that the 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 under relevant laws.

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

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo 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 or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

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. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

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

The information or the products and services referred to on this site 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 are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

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