Strong buying in Yen on US concerns

22 March, 2017

The USD hit the brakes today, as the market looked unhappy on the US uncertainty around the health care reforms that are struggling to gain any traction, despite all of this, the economic data continues to be positive for the most part. While not a big week for US economic data there is still existing home sales and unemployment figures this week, which will have some impact on USD movements but for now it would seem the market is seeking some safety where it can, and this has carried over for the USDJPY. This should come as no surprise as the pair has been ranging recently, which is a strong indicator that markets are unable to fully invest in the US economy until they can see the current Trump government challenges eliminated.  BoJ minutes are also due out shortly, but they will carry little weight until the market can make up its mind regarding the USD and the effects in the long run.

On the charts the USDJPY has been very tight in its current ranging band and time again we are seeing it respect key levels, even when under pressure. The movements downwards have hit solid support at 111.655 but are looking to extend further and could potentially be moving into a bearish phase, and the next extension lower could find strong support at 110.224, which also corresponds with the 50.0 fib level at present. Either way the movement we are seeing at present has the potential to finally break the ranging pattern and let the bears out, or alternatively see the ranging continue and a bullish rise on the cards.

Oil markets have once again shown their bearish side as news out from Russia about extending oil cuts only lead to a small jump in the market before the bears swiped it hard. So far jawboning from OPEC and non OPEC members has done little to stop the market from feeling bearish, and this should come as no surprise given the fear that Trumps administration is pro oil and will look to expand production in the US in the long run. With US stockpiles already at record highs and production cuts not making a big dent there could be further bearish movements on the horizon unless we see some crude inventory deficits.

Oil, with the bears in charge is trending rapidly down and is looking to find some decent support  levels in the market. So far the 61.8 fib level looks likely to be the first contender with support levels at 46.39 and 45.24 and with the 50 and 100 moving average lagging further up the charts we could end up in a scenario where the bears have a good chance of taking control and pushing their agenda for some time. Obviously I would expect some bearish movements to stoke further OPEC reaction but it will be interesting to see how much the market will listen now days until we do see strong fundamental changes. 


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