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Traders are back to risk-on mode on stimulus hopes, but will it last for the session? If not, USD/JPY looks like it has potential for the bears out there.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on EUR/USD for a trend retracement opportunity, so be sure to check that out to see if there is still a potential play!

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 10749.06 +1.17%
FTSE: 6078.17 +1.88%
S&P 500: 2838.06 +3.33%
DJIA: 24639.31 +3.31%
US 10-yr 0.644% +0.146
Bund 10-YR -0.76% +0.084
UK 10-YR: 0.255% +0.095
JPN 10-YR: -0.031% +0.102
Oil: 46.77 -0.02%
Gold: 1660.90 +1.09%
Bitcoin: 8081.54 +2.69%
Etherium: 203.74 +2.64%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • API Crude oil inventory at 8:30 pm GMT
  • U.S. President Trump speech at 9:30 pm GMT
  • RBA Debelle speech at 10:00 pm GMT
  • Australia Consumer confidence at 11:30 pm GMT
  • Australia Home loans at 12:30 am GMT (Mar. 11)

What to Watch: USD/JPY

USD/JPY 1-Hour Forex Chart
USD/JPY 1-Hour Forex Chart

It’s been a wild ride and that doesn’t look to change with today’s price action as traders buy up risk assets on hopes for coordinated stimulus actions by central banks and governments to combat the economic slowdown. But with the markets jumping up and down like a kangaroo, who knows how long that sentiment will last. For this session though, we’ve got a very light economic calendar and the upcoming speeches from U.S. President Trump and RBA Debelle aren’t likely to be big catalysts as well. So, we’re looking at USD/JPY for a short-term price action play as volatility continues to ride high.

On the one hour chart above, we can see the pair’s recent down move to just above 101.00 before bouncing higher to retest 105.00, just this week…crazy! The pair is pretty much in consolidation mode at the moment without any fresh catalysts on today’s session, but with volatility still high and the coronavirus/monetary policy speculation still high, the best play is likely to wait for a break out of the consolidation area (around 104.00 – 105.00).

If you’re a bear on the pair, you’ve got recent price action and the fundamental story on your side that favors the yen, and if we see a break/retest/hold at 103.70, a short play should be considered, especially if we don’t get any positive coronavirus updates and/or hints of more stimulus. For the more aggressive, shorting from current levels up to 105.00 provides for a better potential return-on-risk, and a higher probability of success given that the pair already rallied from today’s open by over 270 pips. Traders may be now looking to fade such a big move on the session.

If you’re a bull on the pair, today’s momentum is on your side, and if we continue to get news of slowing infections, more monetary/government stimulus (President Trump’s speech later could be a catalyst), then watch out for a break above 105.00. If you’re looking to for a better potential return-on-risk, then looking for a pullback lower might be the way to go, and given the daily ATR of around 120 pips, 104.00 down to 103.50 is the area to watch (one ATR away from today’s high) for bullish reversal patterns to consider going long.