Action Insight Weekly Report 1-9-21

Dollar Relatively Resilient in Strong Risk-on Market, Setting the Base for a Rebound?

Global investors were all in risk seeking mode in the first full week of 2021. That came despite all the headlines of surges in coronavirus infection and death, return to strict lockdowns, chaos in Washington and Joe Biden's certification as US President-Elect. Dollar didn't perform too well but there was surprisingly no deep selloff neither. Strong rally is US treasury yield was probably finally giving Dollar some support, which was in turn reflected in the selloff in Gold too. Is Dollar's finally building a base for sustainable rebound? We'd likely see very soon.

Staying in the currency markets, selling focus turned to the Japanese Yen. Sterling followed Yen and Dollar and ended as the third weakest. Australian Dollar ended as the strongest one, followed by New Zealand Dollar. Other major currencies are generally mixed, including the Canadian, which reacted little to rise in oil prices.

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USD/JPY Weekly Outlook

USD/JPY staged a strong rebound after dipping to 102.58 last week. Break of 103.89 resistance suggests short term bottoming on bullish convergence condition in 4 hour MACD. Initial bias is mildly on the upside this week for channel resistance (now at 104.47). Sustained break there will argue that the down trend from 111.71 has finally completed. Stronger rise would be seen to 105.67 resistance for confirmation. Nevertheless, rejection by the channel resistance will maintain bearishness, for extending the down trend through 102.58 at a later stage.

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