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JPY Volatility In Focus To Start The Week

FOREX
  • USDJPY posted an impressive 563-pip range on Monday as fresh cycle highs above 160.00 likely prompted Japanese officials to intervene and stabilise the yen. In early Europe, USDJPY printed as low as 154.54 with holiday-thinned trade potentially exacerbating the price swings.
  • USDJPY spent a lot of the US session edging back to the high 156’s, however, renewed weakness saw a quick late dip to 155.10, as markets remain wary over any sudden moves. As a reminder, initial key technical support to watch lies at 154.01, the 20-day EMA.
  • There has been no official confirmation on intervention from Japanese authorities, with top currency official Kanda stating he has ‘no comment for now’ and that the market will find out of possible intervention when data is posted in late May.
  • As a result, the USD index resides 0.40% lower, in fitting with modestly lower US yields. Stock markets trade marginally in the green, which assists the likes AUD (+0.55%) and NZD (+0.65%) which outperform in G10 and is bolstering the performance of EM FX.
  • With Aussie retail sales and China PMIs due overnight, attention will be on a developing bullish phase for AUDUSD. Resistance at 0.6526, the 50-day EMA, has been breached and the clear break highlights a stronger reversal that signals scope for a climb towards 0.6644, the Apr 9 high.
  • GBPUSD is also now up over half a percent on the session, trading above 1.2550. Despite the trend condition in GBPUSD remaining bearish, a corrective cycle continues to play out, which is allowing an oversold condition to unwind. Price action has narrowed the gap to resistance at 1.2580, the 50-day EMA.
  • Key attention this week will rest on Wednesday’s Fed meeting and press conference, as well as Friday’s release of NFP.
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