USD/JPY bulls must contend with geopolitical angst
Unstable geopolitics are giving yen bulls an opportunity.
EUR/JPY lost its earlier gains, the S&P opened lower, and Treasury yields dropped following reports that Ukraine launched UK Storm Shadow missiles into Russia, heightening geopolitical uncertainty.
However, the yen's safe-haven appeal is limited when compared to the U.S. dollar. Investors still prefer the greenback due to strong U.S. economic performance and expectations of tax cuts and new tariffs.
Furthermore, rising bitcoin prices, year-end funding demands, high energy prices and the potential for seasonal gains in U.S. equities provide additional support for the dollar.
The 20-day rolling correlation between the USD index and bitcoin is near its highest level of the year. Nvidia earnings, due later Wednesday, will test the strength of equity market fundamentals.
While optimism about the greenback remains robust, traders are reluctant to chase USD/JPY higher. Yen futures positioning remains muted and recent option activity shows a preference for the yen. Risk reversals favoring the yen are near the highest point in six-weeks.
USD/JPY's mixed picture will start to turn outright bullish if spot can close above its upper Bollinger at 156.24, the Nov. high of 156.76 and July l1 low of 157.40. The 21-DMA of 153.58 is support for trend followers.
For more click on FXBUZ
Yen chart https://tmsnrt.rs/3Og9iX4
Bit vs. euro https://tmsnrt.rs/3CEhdLy
(Robert Fullem is a Reuters market analyst. The views expressed are his own.)
</body></html>Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
