USD/JPY traders with a sharp focus on US yields for the weekly close
Source: Economic Events March 13, 2020 - Admiral Markets' Forex Calendar
Given the massive volatility in US yields, and knowing the high positive correlation between US yields and the USD/JPY, high volatility in the currency pair over the last few days does not come as a big surprise.
In fact, we expect volatility to stay very high, especially if we get to see sharper moves in US yields, potentially driven by surprising US economic data sets.
According to the Fed Watch Tool, market participants expect the Fed to cut rates by another 75 basis points by next Wednesday, and the impact of today's Michigan Consumer Sentiment seems limited on US yields and thus also the USD/JPY.
But a print below 95 points could add further fuel to current US recession fears, push US yields lower, and drive the USD/JPY lower, too.
On the other hand, forex traders should keep an close eye on the BoJ and any comments which may make it over the news ticker: any verbal intervention from the BoJ e.g. openly expressing concerns over instability in Japanese financial sector and economy, warning between the lines that an intervention from the BoJ might be on its way, could see a sharper push higher in the USD/JPY above 105.00 and probably as high as 106.50.
Still and overall, we remain bearish towards the currency pair, and see with a next wave of risk off hitting the markets and a push lower in US yields, at least a re-test of the recent lows around 101.50 as a serious option:
Source: Admiral Markets MT5 with MT5-SE Add-on USD/JPY Daily chart (between 03 January 2019 to 12 March 2020). Accessed: 12 March 2020 at 10:00 PM GMT - Please note: Past performance is not a reliable indicator of future results, or future performance.
In 2015, the value of the USD/JPY increased by 0.5%, in 2016, it fell by 2.8%, in 2017, it fell by 3.6%, in 2018, it fell by 2.7%, in 2019, it fell by 0.85%, meaning that after five years, it was down by 9.2%.
Discover the world's #1 multi-asset platform
Admiral Markets offers professional traders the ability to trade with a custom, upgraded version of MetaTrader 5, allowing you to experience trading at a significantly higher, more rewarding level. Experience benefits such as the addition of the Market Heat Map, so you can compare various currency pairs to see which ones might be lucrative investments, access real-time trading data, and so much more. Click the banner below to start your FREE download of MT5 Supreme Edition!
Disclaimer: The given data provides additional information regarding all analysis, estimates, prognosis, forecasts or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
- This is a marketing communication. The analysis is published for informative purposes only and are in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
- Any investment decision is made by each client alone whereas Admiral Markets shall not be responsible for any loss or damage arising from any such decision, whether or not based on the Analysis.
- Each of the Analysis is prepared by an independent analyst (Jens Klatt, Professional Trader and Analyst, hereinafter "Author") based on the Author's personal estimations.
- To ensure that the interests of the clients would be protected and objectivity of the Analysis would not be damaged Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
- Whilst every reasonable effort is taken to ensure that all sources of the Analysis are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis. The presented figures refer that refer to any past performance is not a reliable indicator of future results.
- The contents of the Analysis should not be construed as an express or implied promise, guarantee or implication by Admiral Markets that the client shall profit from the strategies therein or that losses in connection therewith may or shall be limited.
- Any kind of previous or modeled performance of financial instruments indicated within the Publication should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
- The projections included in the Analysis may be subject to additional fees, taxes or other charges, depending on the subject of the Publication. The price list applicable to the services provided by Admiral Markets is publicly available from the website of Admiral Markets.
- Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, you should make sure that you understand all the risks.