Looking back at the reactive function of USD/JPY in previous crises, what is the outlook for the pair in the next few weeks?
Here is their view, courtesy of eFXdata:
CitiFX discusses USD/JPY outlook and compares price action leading into and out of 3 instances: 17 Jan 1995: The Great Kobe Earthquake – 11 March 2011: The Fukushima Disaster – and 16 April 2020: Abe declares a National State of Emergency.
“In 1995 the reactive function in USDJPY was somewhat slower , taking place over about 7 weeks and seeing USDJPY fall about 10.5% (and ultimately further over time.) In 2011 the reaction was much quicker and saw USDJPY fall about 8.5% over 5 trading days. So we saw an average fall in a 1 week to 7 week timeframe of about 9.5%,” Citi notes.
“The suggestion would be for a fall to between 99 and 97 on USDJPY in the weeks ahead (with strong support below standing at 99-101.)…Watch this 106.92 level that has held twice before. They say “3rd time is the charm” and if that gives way then the impulsive move lower may materialise,” Citi adds.
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