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Andreas Zanin
Analysis | July 9, 2021

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

In a post a couple of weeks ago we featured the Yen and noted it was the most “hated” currency by speculators and the odds of a rally to correct its oversold extreme were high. We have seen a rally and view the JPY as a long-term buy our view of the fundamentals, sentiment, and technicals below.

Fundamentals – The Yen the Number 1 Safe Haven

We have some caution amongst traders and JPY is the number 1 safe-haven currency and while the majority see no big weakness coming in stocks (Just as the majority a couple of weeks ago saw no big upside in the Yen) the spread below, shows a major gap between the SP500 and the currency pair which many use as the proxy risk on – risk currency pair AUD/JPY.  Any major stock market weakness will see the JPY appreciate against all other major currencies.

Speculators Remain Heavily Short the JPY

Speculators still remain heavily short of the Japanese Yen on the COT Net Traders Positions – large speculators held their biggest net short position in over 18 months coming into this week and while we think some speculative stops have been hit speculators still hold a sizeable Yen short position which points to more Yen strength.

Technical Analysis

CAD/JPY

This the trade that has biggest Yen short position in it and we expect any rallies to resistance and the 20 daying moving average to fail – If we dont rally, then a move through todays low should in our view folw through down to major support levels indicated.

EUR/JPY

We have major resistance at the 131.00 level and the 20 day moving average and expect any rallies to fade if we break below todays low expect follow through selling to the downside down major levels of support indicated.

AUD/JPY

Any rallies above 82.00 in our view are likely to follow back to main major resistance at 83.00 and the 20 day moving average –  If we dont rally a break of todays low sets up a test of daily chart support and if this breaks, we expect a move down to weekyl chart support.

 

Research provided by LearnCurrencyTradingOnline.com

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