US Dollar breaks out against the Japanese Yen

Markets were buffeted by multiple factors yesterday, from Brexit to macro data to Sino-US tariff war. Amidst this crosscurrent, the US Dollar benefitted.

This is seen from the USDJPY pair. This rate has finally broken through the 110.0 range resistance and is now racing towards the next technical objective at 111.0 (see Featured Chart). Prices may overcome this ceiling but there is another resistance above it at 112.0. With the weight of so many resistance levels above it, the rate’s climb could be choppy. Watch to buy on setbacks.

The USD strength is also reflected in the GBPUSD pair, where the rate has fallen into the 1.285 low again. A test of the 1.280 support is coming up.

More worrying is the EURUSD. The unending flow of weak EU macro data has hammered investor sentiment on the currency. Expectations of a ‘technical’ recession have risen in many EU countries (e.g., Italy). Technically, the rate is on the cusp of a breakdown beneath 1.130 (see below). But given its range pattern I wonder if EUR is making another failed downside breakout. Only watch to sell on a firm break below 1.125.

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Jackson has over 10 years experience as a financial analyst. Previously a director of Stockcube Research as head of Investors Intelligence providing market timing advice and research to some of the world largest institutions and hedge funds.

Expertise: Global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.

Jackson has a PhD in Finance from Durham University.