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USDJPY Corrective Cycle Remains In Play, Rises 0.9%

FOREX
  • Despite a fairly lacklustre start to the week, in terms of data and newsflow, USDJPY has rallied 0.9% on Monday, extending the post-PPI bounce from Friday’s lows of 135.63 to trade within close proximity of the 138 handle.
  • The short-term outlook is bullish and a corrective cycle remains in play, following the recovery from 133.63, the Dec 2 low. This phase has allowed an oversold trend condition to unwind. An extension higher would open 138.70, the 20-day EMA. This average marks the first key short-term resistance.
  • Overall, the USD index has risen 0.35% with higher front-end US yields supporting the greenback throughout the session ahead of tomorrow’s critical US CPI release and Wednesday’s December Fed meeting.
  • Weaker metals prices added some pressure on commodity-tied currencies, with the likes of AUD falling around 0.8% against the dollar. In similar vein, the south African Rand is the worst performer across emerging markets, plummeting 1.4% to start the week, while the Phala Phala saga surrounding the South African president remains front and centre.
  • UK employment and German ZEW sentiment data headline the European docket on Tuesday before the much-anticipated US inflation figures are released. Focus then quickly shifts to policy decisions from the Fed, the BOE and the ECB.
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