USD/JPY Technicals – Trading Lower Despite Higher Inflation

USD/JPY Technicals – Trading Lower Despite Higher Inflation

Yen strengthened today after the release of stronger than expected inflation data. Consumer Price national index (ex fresh food) in August increased by 0.8% Y / Y, higher than the previous month by 0.7%, which is similar to the consensus estimate of analysts. Price index for overall consumption is also better than expected, coming to 0.9%, which is 10 points higher base than the 0.8% expectation and 20 basis points higher than the July issue. Traditionally, higher inflation is bullish for the currency (eg stronger Yen) that higher inflation usually means that the Central Bank will be hawkish and raise interest rates to prevent inflation falling out of control. In this regard, it makes sense that the Yen strength has increased today.

However, this is Yen we speak, where agreements do not take at all. In fact, recently higher than the number of expected inflation have been interpreted as a sign that abenomics works, resulting in trading USD / JPY higher instead. It is therefore interesting to see USD / JPY reacted bearishly this time. But this is not the only thing that is disturbing - Finance Minister Aso also implied today that lower corporate taxes should be considered, should have been a boon for Japanese equities and by extension (or correlation) USD / JPY as well. But instead of pushing above, both the Nikkei 225 and USD / JPY is still traded lower, compounding the mystery today.

Time Table

maybe we can be barking up the wrong tree, and that the main driver of the decline of today is entirely based technique. There are some potential truth to this assertion that prices were kept below the ceiling 99.15 since September 24. It is therefore not surprising to see prices push lower. The fact that the decline found some support around the 98.7 Kumo gives credence to the assertion and subsequent rupture of the above Kumo opens a potential move to 98.3 previous low oscillation which is also close to decreasing levels trendline.

stochastic readings disagreement, however, and suggest that we could still see a retest of the Kumo overload as Stoch readings are now oversold and high score. Moreover, as we lack a bear attacking Kumo, it may be too early to assume that the price will be able to negotiate lower here immediately. Therefore, the most bearish scenario would actually have prices push higher now, but still remain below Senkou Span A (Kumo topside), allowing stochastic readings to push forward the next wave of momentum bearish bring us below 98.30. It is also likely that a fall twist Kumo before then also be formed, giving us further bearish strength.

Table Daily

If the short-term price action behaved exactly as described above, it is that we may be able to break the Kumo is thinning. It is also likely that the rising trend line was broken, but prices may still find support from the descending trend line. Stochastic readings does not favor a break of the descending trend line that readings are currently near the oversold region, where the probability of a rebound / lateral movement after the downward trend line is tagged becomes higher. If prices fail to break Kumo / Rising trendline, the case of a bounce higher increases, which will open a move towards 100.50. Stochastic should in fact with such a hollow scenario and the previous peaks were formed around the same levels Stoch. Given the varied opportunities coupled with unclear fundamental drivers, traders JPY USD / should wait for confirmation of one or the other direction before committing heavily. A good way to measure (if possible) would wait for Monday's reaction if a bounce / breakout has occurred and if the market direction continues for the closing of the day

Links: .
NZD / USD Technicals - Remain Under 0.83
Rhyme And Reason Not A Concern EURO Dollar Gold
Gold Technicals - The rise on concerns the US Budget

This article is only for general information purposes. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or its subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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