For better (economy) or for worse (health care advice) the eased lockdown restrictions that a number of nations are announcing to help economies recover from the global pandemic is still encouraging support for riskier assets. This is still a very sensitive and cautious time, resulting in a number of major asset classes including major currency pairs and gold trading in very tight ranges but traders have been provided with volatility from a weakening Japanese Yen.
The Japanese Yen, aka the ultimate best friend of traders in uncertain times has been wacked at the beginning of trading this week. I still have my own doubts on economies reopening as soon as they are and feel this market needs a fundamental charge to change direction in a meaningful way, but for the time being the trend of potential further Yen weakness can lead to opportunities in USDJPY and Yen crosses.
- The USDJPY has climbed by just over 120 pips to reach its highest level since late April. Potential buyers will likely wait to see if the USDJPY can get past the gates of 108.09 before deciding if the pair can indeed continue its incline as high as perhaps 109.
- The EURJPY has enjoyed a tear higher up the charts since the failure swing reversal candlestick emerged on 7 May. The pair has climbed close to 150 pips today alone and a push above 116.56 will be monitored to see if it is possible for EURJPY to recover as high as maybe 118.
- The incline in GBPJPY has been more modest and less convincing with only a 60 pip move to show as progress today. It does appear that the United Kingdom remains in a fragile state with the second largest fatalities worldwide from the virus and will not be lifting lockdown as fast as peers. The situation can make it make or break for the pair and we might see gains limited in GBPJPY as a result.
- To the downside, GBPJPY is a fair distance away from the 2020 lows seen a few months back and perhaps some of these support levels will come into play should Pound negativity resume.
- AUDJPY is in a similar position and given the sensitivity the Australian economy faces to external headwinds and world economic optimism, perhaps the small advance in AUDJPY can also potentially find limitations to 70.41.