In today’s Forex Forecast video, we discuss the fundamental and technical outlook for USD/JPY ahead, with Wilson Leung, Director of Trendsetter FX, and Nick Batsford, CEO at Tip TV.
Leung highlights the change in bias on USD/JPY, turning from bearish to a bullish view due to fundamentals favouring a strong dollar and a weaker yen. With the US stocks seeing record highs and the Nikkei moving higher, the markets are now seeing a return in risk appetite.
Yen sellers are back in action due to the expected easing ahead by the Bank of Japan. Leung further highlights that “There has been market chatter than that BoJ will intervene in the FX markets if USD/JPY dips below 100.00 level, and we haven’t seen the pair trade below this level for more than an hour”.
On the technical outlook, Leung notes the rising indicators which suggest that the price is likely to move higher. Adding to this, Leung mentions that closing above the Brexit high at 106.84 will see imply that the recovery from sub 100 level will continue. “The market looks overextended at the moment”, says Leung and suggests being patient to buy any pullback in dollar yen. Leung doesn’t believe that this is start of a bull run, but mere a correction to the downtrend from last year’s high at 125.856.
Leung also takes a look at the weekly chart for the pair, and notes that a temporary has been formed at 98.97.
On the trade setup, Leung suggests maintaining a stop at 103.90 for long positions targeting 108.50.