The Japanese Yen (JPY) is strengthening against all major currencies today as risk appetite appears to diminish. Yesterday, the US 10 Year Treasury yields fell sharply as investors shifted to safer assets amid growing concerns about emerging market risk. Moreover, Japanese economic data remains disappointing with today’s release of Q1 GDP showing growth down 0.2% in the first three months of 2018 which is worse than expected. There are also concerns for Japan’s export dependent economy as the Trump administration attempts to trim the trade deficit.
On the 4-hourly chart, USDJPY appear bearish in the short term and the pair trades back below the 200 SMA and tests support at 109.20. A break of this level could open the way for a continuation towards supports at 109.00 and then 108.50. However, a reversal above 109.75 would change the outlook with resistance at 110.15 and 110.45.
The Australian Dollar has been one of the weakest currencies and so the AUDJPY pair is likely to see sharp move as the Yen strengthens. In the 4-hourly timeframe, the AUDJPY rally failed at the 84.55 level and reversed to support at 82.60. A break of this level will likely see a continuation to 81.20 with support at 82.00. On the flip-side bullish reversal above 83.30 is needed for a retest of the highs at 84.00.