USDJPY, Daily and Weekly
The Yen has weakened amid a risk appetite revival in global asset markets amid a de-escalation in trade tensions, with both Washington and Beijing signalling a willingness to re-start bilateral negotiations. USDJPY rallied to a six-month high of 112.38 after breaking above the May high at 111.39. EURJPY lifted into three-week high terrain, and AUDJPY reversed most of the outsized losses the cross had seen yesterday (following Trump’s threat to slap tariffs on a further $200 bln worth of Chinese imports).
The Yen’s weakness reflects a unwinding in the currency’s built-in safe haven premium, which has allowed market participants to re-focus on bullish fundamentals of USDJPY (with the Fed on a tightening course while the BoJ remains fully committed to maintaining ultra-accommodative monetary policy). Emerging market currencies rebounded as higher beta assets and currencies found fresh demand.
USDJPY rebounded from 61.8% Fibonacci retracement level since the peak of 2018 at 113.37. The Resistance comes at the confluence of the 200-Week SMA and January’s peak, within 113.24 – 113.37, while the next Resistance is set to 114.30. Support remains between the 61.8% Fib. level and the latest 3 consecutive daily upper fractals, at 110.00-111.40. Nevertheless, a crossing of the 50-day MA above 200-day MA would provide further confirmation to the upside for USDJPY.
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