The yen pulls back after hitting resistance during yesterday’s rally after the current bout of risk aversion. “You’ve had a pattern of increased risk aversion, but that came off today and hurt the yen,” said Normura FX strategist Charles St-Arnaud. St-Arnaud said that “at some point” investors will look for more emerging market exposure, but that is still yet to be seen as slow growth and political unrest sweep the many emerging markets.
Yen futures pulled back from the year-to-date high of 9.927, while the price action still remains in an uptrend and supported by an ascending trend line. The sloping ADX is a positive indication that the move up is likely to continue, whereas if the ADX would flat line or tick downwards. The +DMI did tick down, suggesting a pullback, but the -DMI has yet to confirm with any upside movement.
The RSI is also sloping up, which further supports the uptrend. Support will be where the ascending trend line and 20 EMA meet at 9.83746, while the first resistance level on the 4H chart is 9.9 prior to retesting the 9.927 highs made on February 4. The Nikkei, which typically trades inverse of the yen, is down over 13 percent year-to-date and down 185 points (as of 3:05AM).