Is the USDJPY Setting Up for a Major Fall Amid Trade Wars?

Is the USDJPY Setting Up for a Major Fall Amid Trade Wars?

With the trade war discussions at the G7 summit tomorrow and the FOMC rate announcement next week, is the USDJPY setting up for a major down move?


Tomorrow kicks off the G7 summit in Canada.  The summit will likely create volatility in the markets as trade relations and tarriffs will be discussed.  Already this week multiple countries have announced tarriffs on US imports in retailiation to the US imposing tarriffs on their imports into the US. 

Following the G7 summit, on Wednesday, June 13th, the FOMC Economic Projections, FOMC Statement, and Federal Funds Rate will be released at 2:00 pm, followed by the FOMC Press Conference at 2:30 pm (all times are based on New York time). According to the CME FedWatch Tool, there is currently a 93.8% probability that the Feds will raise interest rates.

In this video, Gail Mercer, founder of TradersHelpDesk, shows why the USDJPY may begin a downward descent using both a daily and weekly chart example. 

On the daily chart, the Stochastics is potentially overbought because it is above the 80 line.  Additionally, price is at the daily ATR and forming a potential reversal bar to the downside.  If today's price bar closes lower than the low of the previous bar, 109.80, then the three bar pivot formation will be complete.

On the weekly chart, the Stochastics has potentially been overbought and is currently moving downward.  Additionally, a reversal bar formed right at the line of white dots.  (The line of white dots act as a resistance area.)  Although a pin bar formed, the issue is it is not a true low and the current bar will likely close to the downside, provided that the daily bar completes the pivot bar formation.



The information contained above may have been prepared by independent third parties contracted by Nadex. In addition to the disclaimer below, the material on this page is for informational and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument on Nadex or elsewhere. Please note, exchange fees may not be included in all examples provided. View the current Nadex fee schedule. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representations or warranties are given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk and any trading decisions that you make are solely your responsibility. Trading on Nadex involves financial risk and may not be appropriate for all investors. Past performance is not necessarily indicative of future results. Nadex contracts are based on underlying asset classes including forex, stock index futures, commodity futures, cryptocurrencies, and economic events.

Trading can be volatile and investors risk losing their investment on any given transaction. However, the design of Nadex contracts ensures investors cannot lose more than the cost to enter the transaction. Nadex is subject to U.S. regulatory oversight by the CFTC.