Fundamental Forecast for JPY: Neutral
Talking Points:
- JPY Surges on Safe-Haven Demand as Italy Sparks Widespread Panic[1].
- Japanese Yen Technical Analysis: Key Retracement Props Up USD/JPY[2].
- If you’re looking for long-term analysis on the Yen, check out our Quarterly Forecast for the currency[3].
Want to see how other traders are approaching USD/JPY? Check out our IG Client Sentiment indicator[4].
USD/JPY Catches at Support, Produces a Weekly Doji
The Japanese Yen[5] came into this week riding a wave of risk aversion, showing strength against most major currencies in a theme that had started to show more prominently last week. When the US-North Korea summit was called off, and as trade tensions with China started to get back in the headlines[6], a spate of Yen-strength developed that ran into this week’s open. And when this was coupled with another fresh bout of political risk out of Europe[7], that theme of risk aversion caught another gust of wind, and the Yen continued to drive-higher. In USD/JPY[8], this helped to set a fresh May low just ahead of the end of the month, and the prospect of bearish continuation in the pair was starting to look more attractive.
But the final three days of this week saw the world take a step back from the ledges of risk aversion, and Yen-weakness started to come-back, helping to wash away those earlier-week losses. At this point, many Yen-pairs are displaying Doji formations on the weekly chart, indicating how we may be sitting ahead of a
