USD/JPY: Multi-quarter downtrend completed in 2016 and new uptrend looks set to extend - Westpac

Tim Riddell, Research Analyst at Westpac, notes that the 50% of range of USD/JPY from 2011’s low (100.50-60) effectively held in 2016 and the clear shift in monthly momentum should allow for a push into the 125-145 range.

Key Quotes

“Current gains have already reached the lower levels of the value range seen in 2015 so risk of pullbacks should be noted, but in the context of a strong uptrend.

“Weekly

• Although weekly momentum is high, it is not rolling over (as yet) and the uptrend looks set to test the 2015 highs (in the 125’s).

• The lower end of 2015’s value range (118’s) may cap USD/JPY in the near term, but dips are still seen as buying opportunities.”

“Daily

• Despite daily momentum rolling over, pullbacks remain extremely contained, given the extent of the gains since early November.

• This appears to be a classic JPY trend in which corrections fail to achieve minimal expectations as the trend (lower in JPY) extends and defies daily momentum.”