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JPY to stay bid on haven demand

Kira Iukhtenko, analyst at FX BAZOOKA

Japanese yen keeps on strengthening on its safe haven appeal on the back of the emerging markets woes. Since the beginning of January the USD/JPY pair has already retraced 50% Fibonacci from the October-December rally. On Tuesday the pair has hit a 2-month low of 100.75.

The greenback is trying to gain some ground on Tuesday, but I expect the rallies to be sold in a short term. This week the market sentiment will be shaped by the US employment data on Thursday and Friday. If the jobs data turns out to be weak, market concerns will arise. As a result, the yen and Swiss franc will definitely be bought on haven demand. The low December NFP (74K) heightens the chance for downbeat data for January.

My near-term target lies at the 100.00 mark (200-day MA). This is 50% Fibonacci retracement from the 2007-2011 decline. However, a decline below here is unlikely – or at least requires a further worsening of the risk sentiment. The outlook remains bearish as long as the pair holds below 103.70. 


Chart. Daily USD/JPY

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