Two Trades To Watch: USD/JPY And Oil

USD/JPY falls on less hawkish Fed, Ukraine concerns

The pair is falling for a second straight session.

The minutes from the latest Fed meeting were less hawkish than expected, as policymakers favored a measured approach to hiking rates. Market expectations for a 50-basis point rate hike cooled, pulling the USD lower.

Separately the Japanese yen is being boosted by safe-haven flows as Russia, Ukraine fears to build.

NATO rebuked Russian claims that it was pulling troops off the border. Unsubstantiated claims of firing on Russian-backed rebels added to the risk-off tone.

Looking ahead US jobless claims are expected to fall slightly to 219k vs 223k last week.

Japanese inflation is due later today, forecast at 0.6% YoY, down from 0.8%.

Where next for USD/JPY?

USD/JPY failed to break above 116.35 for a second time last week as sellers came back in and sent the price lower. Whilst the receding bullish bias on the MACD supports further downside, sellers would need to break below the multi-week rising trend line at 115.10 the daily low.

A break below this trendline would expose the 50 sma at 114.70 and the 100 sma at 114.20.

However, whilst the price remains above the rising trendline, up the near term uptrend remains intact. Buyers could look to 115.80 before targeting 116.35 and fresh multi-year highs.

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Oil resumes its rise after US-Iran selloff

Oil prices are on the rise, regaining losses from the previous session amid rising fears of a Russian invasion into Ukraine. Questions have been raised over whether Russia is withdrawing troops, with the US saying that numbers have increased.

Yesterday oil prices fell sharply on the news that the US and Iran were nearing an agreement to revive the Iran nuclear deal.

If achieved Iranian oil would return to the market boosting supply and pulling the price lower.

Where next for WTI?

Yesterday’s sell-off in oil saw the price dip below the 100 sma on the 4-hour chart at 88.50. Buyers re-entered at this level lifting the price back over the 100 and the 50 sma.

The long lower wicks on the most recent candles suggest that buyers are dominating pushing the price higher. However, the RSI is giving away a few clues at 50.

For the buyers, a move back over 982.50 could be significant, before 93.50.

For sellers, a move below the 100 sma at 90.50 could open the door to the 100 sma at 89.30. A move below 88.50 could see sellers gain traction

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