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Andreas Zanin
Analysis | July 26, 2021

Outlook and forecast: AUD/JPY, CAD/JPY & EUR/JPY

In a post earlier in the month we noted the JPY was the most hated major currency with speculators heavily bearish and felt it could rally – we did see a rally but recently the JPY has pulled back is the retracement a buying Yen buying opportunity? Our views are below…

The JPY is the worlds number one safe-haven currency and very sensitive to risk on risk-off but if we look at the price overall over the last month it’s up despite stock markets being firm throughout the period the JPY is not falling hard, speculators still remain heavily short historically and this points to more strength ahead.

If we do see stock market weakness this will give the JPY an additional boost but even without big weakness there is caution in the currency markets with the market concerned about a reduction in Fed stimulus coming soon and we have the Fed on Wednesday.

In terms of trading USD/JPY we don’t see this pair as offering the best potential due to the fact their both safe-haven currencies – We think the better risk to reward is trading the JPY long against proxy risk currencies so have picked out the AUD, CAD, and EUR.

Technical Analysis

We view all three JPY pairs as bear trends and see the recent rally as a correction of oversold and in strong bear trends in terms of all 3 trade setups we see bounces to the 20 day moving average ( 20 Day MA) as natural corrections back to a mean price. The 20 day MA is one of the most useful averages to use in strong trends in deciding stop placement and also getting a good risk to reward entry. Targets on the charts below are from our view of the speculative positioning…

CAD/JPY

We have seen a 200 pip rally last week which has corrected oversold and we are now stalling at double trend line resistance and the 20 day MA. We view the CAD as a sell with a stop behind the big 89.00 resistance level

EUR/JPY

We have seen a rally to correct oversold and we are seeing the EUR Stall into the 130.00 level. We  view the EUR as a sell on a break of support with a stop behind the 20 day MA and down sloping trend line for a move down to the 126.00 level.

AUD/JPY 

The recent rally has failed into first level resistance and we view the AUD as a sell, with a stop back behind second level resistance which is back behind the 82.00 level and the 20 day MA. The target is big monthly support at 77.50.

 

 

Research provided by LearnCurrencyTradingOnline.com

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