At the start of the week, we want to take a closer look at the USD/JPY currency pair. After the Flash Crash on 2 January in all JPY crosses, the USDJPY Forex pair also tanked, and traded to as low as 104.70 (its lowest levels since March 2018). After the retracement higher, a sustainable move back above 109.00 JPY failed, and if we get to see a break below 107.70, a re-test of the Flash Crash lows around 105.00 JPY seems likely.
Source: Economic Events 14 January 2019 – Admiral Markets’ Forex Calendar
This is especially true if the “Powell effect” from 4 January vanishes, and the markets are hit by a next wave of risk off, probably initiated by rising fears of a potential downgrading of the US credit rating, thus resulting in banks for example, reducing their equity exposure to meet higher margin requirements, if their used US collateral drops in value. The picture in USDJPY would on the other hand brighten a little, if bulls can reconquer 109.00 JPY. Further gains up to 110.00 JPY seem likely then.
Source: Admiral Markets MT5 with MT5SE Add-on – USDJPY Daily chart (between 18 October 2017 to 11 January 2019). Accessed: 11 January 2019 at 10:00 PM GMT – Please note: Past performance is not a reliable indicator of future results, or future performance. – In 2014, the value of USDJPY increased by 13.7%, in 2015, it increased by 0.5%, in 2016 it fell by 2.8%, in 2017 it fell by 3.6%, in 2018 it fell by 2.7%, meaning that after five years, it was up by 4.1%.
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