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USDJPY fails on move above 200 day MA today

  
Analysis, Forex

Tests old trend line support

The USDJPY failed on an earlier peek above its 200 day MA at 109.031 today. The high price traded above and reached a high of 109.063 before reversing lower.  The price is trading back below the highs from October 15 and October 17 at 108.89-93 currently and down testing an old trend line at 108.89.
Tests old trend line support trend line on the hourly chart.
Admittedly, the price last week and this week did move below that old trend line on the 4-hour chart above, but those breaks did fail too.  So if the price is able to extend below the trend line, the price will need to show some downside momentum that keeps the price below that line.
Drilling down to the 5 minute chart below, the look above the 200 day MA (see green line overlay at 109.03) was for less than a single 5 minute bar. The last two price runs higher have tested the 200 bar MA (green line) and the 100 bar MA (blue line) That keeps the bears intraday more in control.   Stay below keeps the sellers more in control.
The 5 minute chart is tilting lower

Yields are marginally lower. The US stocks are also marginally lower.

USD/JPY holds at near two-month highs, what levels to look out for today?

  
Analysis, Forex

USD/JPY trades at its highest levels since 1 August

USD/JPY D1 29-10

The pair remains underpinned as risk trades are looking perky to start the new week, with the S&P 500 hitting a record high and Treasury yields climbing on trade optimism.
That said, price is now running into key resistance from the 200-day MA (blue line) @ 109.06 and that will be the key resistance level to watch out for today.
If buyers can break above that on the daily close, the bias will shift towards favouring them for the first time since May this year.
However, there are key risk events still to follow during the week with the Fed meeting decision notably still to come tomorrow.
Although a rate cut is a shoe-in at this point, it is all about the Fed communication on future rate decisions and that will be the spot to pay attention to for risk trades.
For today, there are also large expiries around 109.00-10 so that may help to keep price action limited around the figure level until they roll off.
If anything else, continue to keep your eye on Wall St to see if investors will push stocks to new record highs after a solid start yesterday.

The USDJPY tests its 200 day MA

  
Analysis, Forex

USDJPY 200 day MA at 109.033

The USDJPY has moved to another intraday high and in the process is testing its 200 day MA at 109.033. The high price (bid side) has reached 109.035.
USDJPY 200 day MA at 109.033
Can the buyers keep the upside momentum going?
Close risk for the buyers is the old high for the day/month at 108.933 area (maybe down to 108.893).  Stay above keeps the bullls more in control.
Can sellers lean against the 200 day MA?
Yes.
These key technical levels are where the buyers and sellers show their hand.  If buyers turn to sellers and bears are interested, they will lean against the technical level and overwhelm the bueyrs. Those sellers will have stops on a momentum move above the 200 day MA.
Buyers, however, will be lookiing to help shove the market through that key level and trigger stops/more buying on the break above.   If done. the 61.8% of the 2019 trading range at 109.352 will be the next major target.
Key target and bias levels for the buyers and the sellers.
The USDJPY on the daily chart

Next week brings the FOMC and BOJ meetings – forecast range for USD/JPY

  
Analysis, Forex
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A note via MUFG on the yen for the week ahead, analysts looking for 107/111 for USD/JPY.

On the Federal Open Market Committee meeting:
  • USD/JPY has already priced in a rate cut by the FOMC to some degree, so would not react much to a cut. If the Fed does defer on cutting rates, then the initial reaction would likely be USD buying, but stock price weakness would likely cap a rise by USD/JPY
And, on the Bank of Japan:
  • BoJ will maintain current monetary policy
  • BoJ Governor Kuroda commented in an interview that he expects a rate cut, so if the BoJ stands firm on policy, JPY may strengthen slightly but probably not continue. But if the BoJ does make some sort of policy change, JPY would initially weaken but not continue to do so because of concerns about side effects and continuity, and at some point USDJPY would lose steam. 
And, of course on a big driver:
  • Ultimately Brexit continues to loom and there will likely be little sense of direction despite some volatility.
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FOMC on the 30th, Wednesday next week.
BOJ on the 31st, Thursday next week.

CFTC Commitments of Traders: Pound shorts haven’t been squeezed…yet

  
Analysis, Forex
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Forex futures positioning data from the CFTC for the week ending October 15, 2019:

Forex futures positioning data from the CFTC for the week ending October 15, 2019:
  • EUR short 75K vs 75K short last week. Unchanged
  • GBP short 73K vs 73K short last week. Unchanged
  • JPY short 7K vs 11K long last week. Longs switch to shorts in an 18K drop
  • CHF short 13k vs 11k short last week. Shorts trimmed by 1K
  • AUD short 48k vs 46k short last week. Shorts increased by 2K
  • NZD short 40K vs 38K short last week. Shorts increased by 2K
  • CAD long 13K vs 5K long last week.  Longs trimmed by 1K
  • Prior week

The big moves in sterling came last week and I’m surprised there wasn’t any covering through Tuesday. That’s good news if you’re long GBP because it leaves lots of juice to squeeze.

Cable hits five-month highs as pound jumps after UK and EU reach Brexit agreement

  
Analysis, Forex

Cable looks towards the 1.30 handle next

GBP/USD D1 17-10

The pound is posting solid gains on the day as Boris Johnson manages to strike a deal with European leaders, although now the big question remains, is the DUP on board and can Johnson get this through a parliamentary vote?
There is plenty of optimism so far but it has to be put into context. Theresa May also had a Brexit deal but could not get hers through parliament at the end of the day. Will it be different for Johnson?
Update: A couple of news sources are reporting that the DUP isn’t quite on board just yet and that is seeing the pound pare some of its gains. Cable back down to 1.2920 from a high of 1.2990 earlier.

GBP/JPY is on a remarkable run

  
Analysis, Forex
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The pair is up 850 pips in the past four trading days

The pair is up 850 pips in the past four trading days
The best place to see the combination of the turn in sentiment on Brexit and the US-China trade deal is in GBP/JPY. The pair has rallied to 139.24 from 130.73 early on Friday.
That’s a monster rally by any standards and captures the squeeze in the pair. Once again today it’s the best-performing duo in a signal that there might be more of a squeeze left.
In the bigger picture, we’re now at the highest levels since May and resistance has now turned to support. The 135.66 level proved to be the retracement to buy this week and unless talks fall apart, I don’t think we will see that again.
Instead, look to the 137.80-138.00 range as an opportunity to buy.

Cable breaks the 200-day moving average for the first time since May

  
Analysis, Forex

Cable climbs to the highs of the day

A report suggesting the UK and EU are on the cusp of a Brexit deal has sent the pound to the best levels of the day.
Cable is up 135 pips to 1.2743. The break above 1.2714 is the first rise above the 200-day moving average since May. With the break, the next level to watch is the June high of 1.2784 and the figure at 1.2800.
Cable climbs to the highs of the day
The rise in the pound has also lifted EUR/USD and yen crosses.
Update: Fresh highs in GBP/USD to 1.2797, breaking the June high and touching the best level since May 16.

EUR/USD falls below 1.10 on broad US dollar strength

  
Analysis, Forex

US dollar strong today

The odds of a Fed cut at the end of the month are at 70% and risks are high with a heavy dose of Fedspeak on the agenda this week but the market wants to own US dollars at the moment.
EUR/USD is at the lows of the day, down 35 pips to 1.0992. The decline started after sellers stepped in a 1.1047. It’s the second day of declines after a three-day rally late last week.
US dollar strong today
Elsewhere, the dollar is also at the best levels of the day against the AUD, NZD and JPY.
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