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“I think our dollar is getting too strong”

Market Analysis

USDJPY, Daily

Trump said “I think our dollar is getting too strong” in an interview with the WSJ, where he also said was “partially” his own fault “because people have confidence in me.” The remarks saw the dollar come under pressure during the Asian session, though following-through selling seems to have been limited by the fact that Trump also said that the U.S. would not label China as a currency manipulator. He also suggested that Yellen may be offered a term as chair of the Fed, contrary to what he said during pre-election campaigning. Trump’s comments on the strength of the Dollar added to pressure also U.S. stock futures which are also down.

USDJPY has been flat-lining after making a five-month low at 108.73 during the Tokyo session. The low was seen after President’s Trump interview. EURJPY and AUDJPY managed to hold above their respective trend lows from yesterday. The USDJPY weakness is likely to be continued after it broke the last down fractal by making a new lower low today. In the daily chart, RSI is at 28, sloping towards oversold territory, while Parabolic SAR remains negative since last week. Hence further downside is expected for USDJPY on the view that geopolitical tensions remain on the boil, with trend support is at 108.20-108.00 and resistance at 50.0 Fibonacci level which is at 110.00.

However, in shorter timeframes, such as hourly charts, the pair seems to be bullish. This can be explained due to a possible correction of the daily downtrend and due to traders’ anticipation for the US Unemployment data in a while. In the hourly chart, RSI is at 46 sloping upwards, while Parabolic SAR are positive since turn earlier today. Additionally, the pair has break up the 20-period EMA. Hence today USDJPY expected to hit 109.30-109.50 area.

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Andria Pichidi

Market Analyst

HotForex

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