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FOREX: USDJPY Remains Higher Despite Pullback, NZD Strengthens

FOREX
  • Despite volatile trading for equities on Monday, risk sentiment remains a touch firmer on Monday, contributing to Japanese yen and Swiss franc weakness overall, while antipodeans trade on the front foot.
  • USDJPY rose as high as 148.22 in early US trade before the more volatile equity backdrop then prompted a gradual 100 pip turnaround. 
  • Note that the bear trend for USDJPY remains in an extreme oversold condition, and the latest recovery - a correction - is allowing this condition to unwind. Initial firm resistance is not seen until 151.10, the 20-day EMA and support comes in at 144.29, the Aug 7 low.
  • The firmer tone for risk sentiment on Monday is benefitting the Kiwi most notably in G10 and the aforementioned pressure on the Yen has seen NZDJPY rise by 0.75%.
  • The cross briefly pierced last week’s highs earlier in the session, rising back above 89.00, which may strengthen the scope for a more protracted recovery to the psychological 90.00 mark which has been technically pivotal in recent months. A close back above here would then target trendline resistance closer to 93.00.
  • Elsewhere, adjustments across major G10 pairs were more limited as global markets await key US CPI data on Wednesday. Elsewhere, UK labour market and CPI is scheduled, as well as the RBNZ decision.
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