Dollar-Yen Strategy: Keep Selling into Strength says Hantec

Yen exchange rates

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The Dollar-Yen exchange rate has edged higher to 105.55 over recent sessions, but the Yen remains favoured according to technical studies by Richard Perry of Hantec Markets.

A mixed outlook continues to dominate on Dollar/Yen as another candlestick lacking conviction formed yesterday.

We continue to see the pair trading with a medium term negative bias (the three and a half month downtrend confirms that).

Subsequently, we continue to play for selling into strength.

Dollar Yen chary

In recent sessions 105.50 has been a struggle for the bulls, but even though there is an early tick higher today, we look towards the likely formation of another lower high.

With the trending falling around 105.85, now also under the old 106.00 pivot resistance, this tick higher will likely be another opportunity to sell.

It means that 105.50/106.00 is now a prime sell zone as the market continues to form lower highs and rallies falter at lower levels. We favour selling for pressure towards 104.90 and below once more.

A decisive close above 106.10 would abort this strategy.

The 48 hours deadline for the talks between the Democrat leadership and the White House over fiscal stimulus comes to pass today.

Democrat House Speaker Nancy Pelosi said over the weekend that Tuesday was the final point at which the stimulus could be delivered before the Presidential Election, two weeks from today.

Whilst there have been fluctuations on Wall Street indices, it is interesting that currency and commodities markets have all but lost direction now.

According to Pelosi’s camp, they have “continued to narrow their differences” but we have been thrown back on forth on several occasions over recent weeks on this stimulus package.

With the potential to use the failure to deliver on stimulus as a political football in the last run up to the election day, we do not hold out much hope that anything positive will be agreed.

If this is the case, then a jolt to sentiment could be seen in the coming days, before markets settle in for the prospects of a Biden victory to the White House.

Biden holds a 10% lead in the averaged polls, whilst also leading in many of the “swing” states.

As for today’s session, there is a mix of sentiment on markets, with little real direction on USD (downside on AUD came after dovish RBA comments with NZD falling in sympathy).