USD/JPY makes it to the top of today’s watchlist as momentum picks up for the bears on Coronavirus fears and Fed speculation.
Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD ahead of euro zone reports, so be sure to check that out to see if there is still a potential play!
|Equity Markets||Bond Yields||Commodities & Crypto|
|DAX: 12954.69 -0.62%
FTSE: 7090.76 -0.92%
S&P 500: 3229.11 +0.10%
DJIA: 28003.72 +0.15%
|US 10-yr 1.349% -0.028
Bund 10-YR -0.504% -0.024
UK 10-YR: 0.527% -0.014
JPN 10-YR: -0.102% -0.032
|Oil: 50.97 -0.89%
Gold: 1652.60 -1.43%
Bitcoin: 9421.54 -2.11%
Etherium: 253.40 -3.95%
Fresh Market Headlines & Economic Data:
- Home prices increase 3.8% in December, according to the S&P Case-Shiller index
- Markets bet Fed is pushed to cut rates in coronavirus response
- Philadelphia Fed Nonmanufacturing Business Outlook Survey increased 13 points in February to 36.1, highest level since Nov. 2018
- US consumer confidence for February comes in at 130.7, vs 132.6 expected
- Canadian corporate operating profits grew $3.9B (+3.6%) to $112.3B in the fourth quarter
- Oil steadies above $56 as supply constraints counter virus fears
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Bank of Canada Lane speech at 5:15 pm GMT
- Fed Clarida speech at 8:00 pm GMT
- API Crude oil inventory at 9:30 pm GMT
- Australia Construction work done at 12:30 am GMT (Feb. 26)
What to Watch: USD/JPY
After a strong move higher for USD/JPY last week, traders have taken a 180 degree turn this week as Coronavirus fears ramp up due to a spike in new cases outside of China. This has lead to a big move in the Japanese yen this week, and with speculation rising that the Fed may be pressed to cut rates in reaction to the Coronavirus’ likely economic impact, the Greenback isn’t fairing too well today.
We’re seeing this in price action as the pair went from around 112.00 last Friday to nearly testing 110.00 in today’s trade. We did see minor support around the 110.35 handle, but that was broken in just the last hour as global risk sentiment shifts back towards negative.
If you’re a bear on the pair, you may take this minor break as a signal to take a short position. Targeting the next support area around 109.65 while setting a stop on a break above the falling ‘highs’ pattern is a solid short-term R:R. But since the break is pretty fresh, you may want to consider a little bit of a bounce to the break before going in with a small position.
If you’re a bull on the pair, you’ll have to wait for a break above the falling ‘highs’ pattern before considering a long position, and that’s only if we see some sort of positive news update on the Coronavirus story within the next session or two. Without that, there isn’t much argument for the idea other than profit taking after a very strong two day move.