Currency Analysis Report 1/20/20 – The USD/JPY Continues To Move Higher

Japan's benchmark share index rose to its highest in 15 months on Friday, as hopes for rebounding global demand and a softer yen drove broad-based gains.

On Friday, the Nikkei 225 rose to its highest level in 15 months, dating back October 2018 and has gained more than 1% this year. Gains were spread across all sectors of the market, with 167 advancers on the Nikkei index against 46 decliners.

Intermarket analysis will tell you that the Japanese Yen is inversely correlated with Japanese equity indices, meaning weakening Japanese Yen is typically associated with stock gains. This is because Japanese Yen is considered a "Safe-Haven" currency…people buy Yen when equity markets are doing poorly and sell their Yen when equity markets are doing well.

USD/JPY has been turning head of late, trading in a robust bullish trend. The price has been elevated considering the US and China's phase-one agreement and prospects for global growth.

For the US dollar, it was firmer in the US session following a turn in US data, bucking the negative trend of late whereby Retail Sales rose 0.3% MoM (control group rose 0.5%, est. 0.4%). The US Jan Philly Fed index at 17.0 also encouraged a bid in the US dollar, beating expectations (est. 3.7, prior 2.4) to retest mid-2019 highs.

Another positive factor for risk sentiment came when the US Senate approved the USCMA trade agreement which now awaits Canada to agree on it and for Trump’s imminent signing.

So is there more room to the upside in the USD/JPY, lets go to the charts?

Monthly Chart (Curve Time Frame) - monthly supply is at 121.000 and monthly demand is at 101.000.

Weekly Chart (Trend Time Frame) – the trend is sideways, with a bias to the upside.

Daily Chart (Entry Time Frame) – the chart suggests to play the extremes at the daily demand and supply zones. I'm personally waiting to see if price can move to the 111.00 - 112.00 range before considering a short.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.