USD/JPY Holds Support Despite Rise In Geopolitical Tensions
Matt Simpson January 6, 2020 6:54 AM
That USD/JPY has held support despite a flurry of negative news over the weekend could be a sign of strength over the near-term. Yet with price action suggesting it topped out late December, the pair could break to new lows after a corrective bounce.
As noted earlier, there were some impressive gaps at this week’s open for gold, WTI and S&P futures after a slew of headlines over the weekend saw tensions in the Middle East escalate further. Yet it’s worth noting that the gap didn’t make it over to USD/JPY, despite then yen being clearly bid on Friday.
So, what does this suggest? If bad news didn’t make it drop, then it could leave USD/JPY vulnerable to a corrective bounce if markets (somehow) revert to risk-on. Although it may not even require risk-on to take over, as bears may be tempted to close out if tensions don’t escalate further from here, would which help lift USD/JPY from its lows.
However, it’s too soon to be complacent and assume all is well and also its plausible that market’s haven’t fully priced in the magnitude of these events. Therefore, our core view if for USD/JPY to break to new low, but for now we’re left wondering how large a corrective bounce we could be in for, ahead of its next bearish leg. Watch today’s video for the key levels we’re watching.
It's Gap Galore Around Middle East Tensions | Gold, SPX, WTI
Gold – A Thing of Beauty
OIL MARKET WEEK AHEAD: Iran’s Possible Scenarios
WTI and Gold Spike On US Missile Attack At Baghdad Airport
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.