The Japanese Yen Finally Caught Some Bids

During times of uncertain, capital flows out of other currencies and into the Japanese yen, causing it to strengthen. This is way the Yen is considered a safe haven currency. Several months ago, when the equity markets sold off due to concerns of COVID-19 slowing down the global economy, we all witnessed bids for bonds, gold, silver, the US dollar and the Japanese Yen.

But since the March lows, while, the equity market, Gold and other precious metals have been on a tear, the Japanese Yen went into hibernation. However, the Yen finally caught some meaningful bid with China's retaliation and request that the US shuts one consulate in China that raised tensions.

A slide in the dollar paused and the safe-haven yen rose to a one-month high on Friday, as Sino-US tensions escalated after China ordered the United States to shut its Chengdu consulate in retaliation for the closure of its consulate in Texas.

The soaring euro was steadfast, but anxious investors pushed the Australian and New Zealand dollars from multi-month peaks, roused the languid yen from its recent range and had the yuan under pressure at a two-week low. Equities also fell.

China’s foreign ministry said it told the US embassy on Friday morning to close its consulate in the southwestern city of Chengdu, days after Washington abruptly ordered the closure of the Chinese consulate in Houston.

However, the bids might be short lived in Japanese Yen, until we also see some definitively bids in the ‘fear-gauge’ VIX as it continues to decline to pre COVID-19 levels. The only thing that could reverse the VIX and Yen, will be when investors stop ignoring the obvious risks and threats facing not only the US, but the global economy.

So where is the Yen going short term, lets go to the charts?

Monthly Chart (Curve Timeframe) – monthly supply is at 0.0103 and monthly demand at 0.00805.

Weekly Chart (Trend Timeframe) – the trend is sideways.

Daily Chart (Entry) – the chart suggests if price can close above the major resistance band, a pull back to to the band to go long would be a viable trade set-up.

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.

Posted Using LeoFinance