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Japanese Yen Extends Decline Despite Intra-Day Recovery

FOREX
  • USDJPY remains 1.25% higher from Friday’s close, continuing the depreciating trend for the Japanese currency that has witnessed a 9% sell-off from peak-to-trough against the dollar throughout March.
  • This comes despite a near 200-pip retracement from the intra-day highs above 125.00 before the pair consolidated around 123.60 as of writing.
  • From our most recent technical analysis piece: It is fair to say that USDJPY is extremely overbought at current levels with today's impulsive rally touching a high of 125.09. We also highlight that the most recent portion of the uptrend, since Mar 11, is very steep suggesting that a sudden correction would not be a surprise. Indeed, this would be seen as a healthy trend development.
  • The June 2015 high of 125.86 is a key resistance and if cleared, would highlight a broader bullish price sequence of higher highs and higher lows on the monthly chart that would reinforce the medium-term bullish argument. Short-term supports are seen at today’s low, 121.97, and then last Thursday’s low of 120.95.
  • Elsewhere, higher front-end US TSY yields lent support to the greenback with the dollar index registering a 0.4% advance for Monday.
  • USD strength and a 6.5% decline in crude futures weighed on the likes of CAD and NOK, however NZD (-1.05%) sat second from bottom of the G10 leaderboard despite the late bounce in equities.
  • Strength in EURJPY kept EURUSD in a relatively narrow range to start the week with 1.10 capping the topside of Monday’s range.
  • Minor data points due overnight are Japanese unemployment and Aussie retail sales before a relatively light European and US docket, headlined by JOLTS as we approach US employment figures scheduled for later this week.
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