Time for a YEN turnaround?
Fundamentals
Japanese governor Haruhiko Kuroda has been on a mission to boost the Japanese economy from deflation, and was doing really well until 2014, when oil began to slump, which dragged on the growth of the Japanese economy.
Inflation has since sunk to near 0%. Kuroda began introducing heavy stimulus measures to weaken the currency and boost inflation to bring it closer to the long-term 2% target. The stimulus didn’t work, so he introduced more, to the point where 70% of Japanese bonds return negative yields.
Since then the yen has continued to appreciate ridiculous levels, and is probably way overbought and due a turnaround, especially given that further stimulus is likely in May, and likely prices often get priced in before an event.
Technicals
We must analyse the technicals for good timing on this trade. There is a strong level of support that has been hit 3 times, and has just hit again, giving strong indication of a turnaround. This is indicated by the lower horizontal black line.
There is also slight bullish RSI divergence on this pair, further supporting a turnaround right now.
While these fundamentals have been the same for a while and the yen has continued to persist in appreciating, I think that given the technicals, and given that all rallies tire out after a while, this could be a good time to enter a long position on USDJPY.
Japanese governor Haruhiko Kuroda has been on a mission to boost the Japanese economy from deflation, and was doing really well until 2014, when oil began to slump, which dragged on the growth of the Japanese economy.
Inflation has since sunk to near 0%. Kuroda began introducing heavy stimulus measures to weaken the currency and boost inflation to bring it closer to the long-term 2% target. The stimulus didn’t work, so he introduced more, to the point where 70% of Japanese bonds return negative yields.
Since then the yen has continued to appreciate ridiculous levels, and is probably way overbought and due a turnaround, especially given that further stimulus is likely in May, and likely prices often get priced in before an event.
Technicals
We must analyse the technicals for good timing on this trade. There is a strong level of support that has been hit 3 times, and has just hit again, giving strong indication of a turnaround. This is indicated by the lower horizontal black line.
There is also slight bullish RSI divergence on this pair, further supporting a turnaround right now.
While these fundamentals have been the same for a while and the yen has continued to persist in appreciating, I think that given the technicals, and given that all rallies tire out after a while, this could be a good time to enter a long position on USDJPY.
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