USD/JPY: Levels, Ranges, Targets

 

The common theme among currency pairs is non USD pairs sit within 100 to 150 pips from significant trend line break points while USD pairs retain positions about 150 from trend breaks. A few examples, EUR/USD’s 1.2160 break point rose 3 pips today to 1.2163 and current 1.2336 is 173 pips above. GBP/USD break point at 1.3723 trades 126 pips above.

NZD/USD sits 2 pips above vital 0.7224 while AUD/USD at today’s falling 0.7823 trades 57 pips from the break. AUD/CHF as the perfect complement to AUD/USD trades 136 pips from its break point at 0.7436. USD/CHF at current 0.9400 trades 106 pips to break point at 0.9506. The outlier as usual in USD pairs is miles oversold and wide ranging USD/CAD as 1.2900’s reveal 303 pips from 1.2669.

EUR/JPY is 121 pips from falling 132.21 while GBP/JPY is 201 pips from 149.16.

USD/JPY opened Sunday night not only in severe oversold territory at 105.63 but its price was extremely low to complement oversold readings in averages 5 to 253 days. The 2 major break points below are located at 105.28 and 104.70 while higher must break 108.42 and now 108.72. The range overall is 344 pips from 105.28 to 108.72.

Above 108.72 targets the 5 year average at 109.69 then 110.77 at the 80 day average which actually is my 100 day as a 100 day average barely exists. The best price above is 113.91. On to 108.72 retains hurdles at 106.18, 106.21 and 106.62 at the average dated to Jan 1999. At 108.62 is the must break to see a run to 108.72.

Our target this morning was 106.03 on a break of 105.81 and USD/JPY achieved 105.92 at the mid point from 105.81 to 106.03. The reverse was caught from 105.92 to 105.75 and USD/JPY achieved 105.73, off 2 pips. I cannot stress the vital import to trade the intervals and a new development since central banks began interest rate changes. Its very slight in intervals but no less vital as pips don’t fly without profit.

The averages below retain a target at 109.83 while the 5 year average at 109.69 as well as 106.62 and 108.72 challenges 109.83.  Overall USD/JPY remains just above neutrality while its counterpart EUR/USD is located dead center at neutral. At 100 and 150 pips from break points in a vast majority of currency pairs, a break out is extremely close.

Below must break 105.36, 105.28 and 104.70 then 103.74 and 103.10. Most important to 103.00’s is 103.01 at the 14 year average. At 103.01 just won’t walk through without a massive struggle.

On the interest rate front, USD short rates now trade above Fed funds over last 4 days, Happened 1 time since last rate rise and overall a rare day to see this. It just doesn’t happen  Only 6 times since Fed began raises has short rates traded above Fed Funds, 4 times in last 4 days, short rates are to high and always drop back to reality to normally support USD, Normally this scenario supports USD pairs.

As the averages below were created Sunday, the numbers are a few pips off. The vital special average for example was 108.88 and now 108.72. Moving averages are more aptly stated as averages that move. Use below average as a guide moving forward yet also note the Quads between 5, 10 and 14 year averages.

80 day = 110.67

Special Average = 108.72

334 day = 112.00

591 day = 111.03

846 day = 113.92

1101 day = 111.53

1279 day = 5Y = 109.69

1356 day = 108.42

1613 day = 103.74

1871 day = 100.54

2128 day = 99.09

2383 day = 98.55

2562 day = 10Y = 98.96

2639 day = 99.26

2894 day = 100.96

3150 day = 102.22

3408 day = 102.67

3589 day = 14Y = 103.01

3665 day = 103.10

3920 day = 104.05

4174 day = 105.36

4429 day = 106.18

4685 day = 106.21

4909 day = 106.62

Brian Twomey