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The USD/JPY pair lost 150 pips on Friday, closing at its lowest level since mid July. The Japanese yen was boosted by the ongoing risk aversion sentiment triggered by China’s economic slowdown, and fading expectations over a rate hike by the US Federal Reserve in September. The pair extended downside movement on Monday, sliding down to less than 120.80 during the Asian session.
Additionally, US 10-year yields fell down to 2.05%, boosting the Japanese currency, while macroeconomic data in Japan, continues to be up beating.
The pair has broken below its 100 DMA now around 122.80 and a major resistance for the upcoming days, and the daily chart favors a continued decline towards the 200 DMA, currently at 120.80, as the technical indicators head almost vertically lower, now approaching oversold readings.
Intraday, the pair is extremely oversold, with the RSI indicator hardly losing its bearish momentum around 14. Despite the extreme oversold readings, the pair may well extend its decline, without much of an upward correction in between, particularly on a break below 121.80, last Friday’s low.
Meanwhile gold prices extended its advance of Friday, with spot reaching a high of $1.168.27, a fresh 6-week high after panic about China’s economic slowdown saw US major indexes suffering one of the worst one-day falls in years.
Spot gold closed the week at its highest in 5-weeks, at $ 1,159.37, right below the 100 DMA. The daily chart shows that the technical indicators are losing their upward strength near in overbought territory, pointing for a possible downward corrective movement ahead.
Nevertheless, this latest recovery suggests an interim bottom is in place, and that the bulls will likely continue pressuring higher.
Talking about the shorter term picture, the 4 hours chart shows that the Momentum indicator has already begun to correct lower, although the RSI indicator has managed to bounce from the 70 level, and maintains a tepid bullish slope in overbought levels.
In the same chart, the 20 SMA heads sharply higher around $ 1,140.25, the probable bearish target in the case of a bearish corrective move.