USD/JPY Technická analýza - USD/JPY Obchodování: 2015-08-27

Yen expected to weaken as risk aversion diminishes

The fundamentals of Japanese economy indicate yen weakness against the US dollar will continue in near term. The second quarter GDP in Japan contracted at 1.6% annual rate, and inflation report on Friday is expected to show consumer price index fell in July. The GDP fell largely due to declining private consumption, which accounts for 60% of economy and fell 0.8% from previous quarter. The fall in private consumption reflected worsened consumer sentiment from 41.7 in June to 40.3 in July, where the consumer confidence index measures consumers’ expectations for the next six months on a scale from 0 to 100. A reading of 100 indicates that all respondents see their living standards improving. On the other hand, the second estimate of Q2 GDP released on Thursday showed US economy grew at 3.2% annualized rate, faster than the 2.3% rate of the first estimate. This will add strength to the US dollar, which lost some of its support in recent days as investors revised downward expectation the Federal Reserve will hike the interest rate in September.

The pair USD/JPY had been trading in the roughly 120 -125 yen per dollar range in the last two months. The price started declining after the release of Federal Reserve’s July 28-29 meeting minutes last Wednesday indicated policy makers were concerned slowing Chinese economy and falling commodity prices increased downside risks for US inflation. This was interpreted as a signal the Fed will likely not raise the interest rates in September. In subsequent days market sentiment deteriorated on worsened global growth outlook and concerns of competitive devaluations by emerging economies on that backdrop, triggering a global selloff in stock markets. The demand for safe haven yen increased as risk aversion grew, driving the price lower. The price broke below the 200-day moving average on Black Monday and closed below it the next two days. On Wednesday markets rebounded, the price continued rising on falling safe haven demand for the yen. The price is back above 200-day moving average and rising. The RSI-Bars oscillator is also rising. We believe the bullish momentum will continue after the pair closes above the lower boundary of the price range at 120.369. A pending order to buy can be placed above that level. The stop loss can be placed below the 200-day moving average at 119.455. We recommend moving the stop loss to a trailing distance of 1 yen after breaking even. If the price meets the stop loss level without reaching the order, we recommend cancelling the position: the market sustains internal changes which were not taken into account.