Dollar/Yen is currently consolidating. It should soon accelerate up again towards 2018

From its lows early September, the Dollar/Yen has followed risk assets and interest rates up in their rebounds. This positive momentum was further supported late October by the re-election of Shinzo Abe in Japan, famous for his Abenomics or aggressive monetary and fiscal stimulus. In this article we review the perspective for Dollar/Yen over the next few months and quarters.

USD/JPY – Daily Graph or the perspective over the next 2 to 3 months

On both our oscillator series, USD/JPY reached intermediate tops. These were made early October on our long term oscillators (lower rectangle) and late October on our medium term oscillators (upper rectangle). Both would imply an intermediate correction into mid November, before USD/JPY recuperates and starts moving up again. Indeed, from late November and December, we would expect USD/JPY to start moving higher towards early next year and reach above 115, opening the door to 118 and potentially even higher targets.

USD/JPY – Weekly Graph or the perspective over the next 2 to 4 quarters

USD/JPY is currently building off the base it made in Q3 2017 (high lows on our long term oscillators; lower rectangle). It should continue to be supported until at least early next year. Our medium term oscillators (upper rectangle) would suggest that one last retest is currently underway. Yet, thereafter, we would also expect the uptrend to resume into Q1 2018. From a price target perspective, we are first eying the higher end of our “C” Corrective targets up around 118 (right-hand scale). We would point that if these are taken out, the next level of targets are around 130 (yet, let’s see if USD/JPY breaks above 118 first before we consider that).

Concluding remarks:

Since early September, the Dollar/Yen has achieved a nice rebound. Our analysis suggests that it reached an intermediate top late September and that it is currently retracing, possibly into mid/late November. Following that, we expect further upside for the Dollar/Yen as we move into December. In first instance, the move would probably extend into February and first challenge the 118s.

Jean-Francois Owczarczak CFTe – SAMT Assistant Vice President – Geneva Chapter – jfo@samt-org.ch

Disclaimer: the above article is for general information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.