JPY at dangerously low levels

JPY at dangerously low levels remains one of the key themes in the currency market, as the Japanese yen continues to weaken against the US dollar amid strong safe-haven demand for the greenback.

Escalating geopolitical tensions in the Middle East have supported the USD, pushing USD/JPY closer to levels that could prompt intervention from Japanese authorities.

At the same time, traders are closely monitoring comments from Bank of Japan Governor Kazuo Ueda for any signals of further policy tightening that could help stabilize the yen and influence the pair’s next move.

USD gains, JPY dangerously low

The USD continued to gain in the FX market yesterday as it enjoyed safe-haven inflows from the escalating tensions in the Middle East. US high impact financial releases today could affect its direction, yet fundamentals seem to remain the driver behind its direction.

Meanwhile, in Japan, the Yen continues to weaken against the USD and has reached levels at which Tokyo may be tempted to intervene in the markets to rescue the JPY. We highlight BoJ Governor Ueda’s speech later today, who is expected to sound hawkish.

Oil extends gains as Middle East tensions escalate

Oil prices continued to rise in today’s Asian session, as tensions continued to escalate in the Middle East. Iran fired missiles at Kuwait and Bahrain, while US-Iran diplomacy seems to be stalling. The conflict seems to be stuck in a stalemate, and the current ceasefire seems to be unstable at best. The developments could further delay the reopening of the Straits of Hormuz and enhance market worries thus supporting oil prices.

IPO price of SpaceX expected at $135 per share

In a Reuters exclusive, SpaceX is reported to plan to fix its IPO price at $135 ‌per share, selling 555.6 million shares and thus raising a record high $75B, thus raising the company’s total valuation to $1.75 trillion. SpaceX’s roadshow begins on Thursday.

Meanwhile, Morning Star’s analysts state that the company may be overvalued, valuing it at $780B, half of the target. Also in Denmark, pension funds seem about to boycott SpaceX’s IPO, citing valuation concerns and “catastrophic governance“. Hence the road to SpaceX’s IPO may not be a bed of roses.

BTC tumbles

Bitcoin’s price continued to tumble yesterday, and in general, with few exceptions, the crypto market is suffering.

The demand from institutional investors in the crypto market, seems to be weaker than previously expected, disappointing crypto traders. Should we see the crypto market sentiment turning even more pessimistic, we may see Bitcoin’s price losing further ground.   

Other highlights for today

Today we get the UK Services PMI figure for May, Euro Zone’s PPI rates for April, the US factory orders for April, the US ISM non-Manufacturing PMI figure for May and the US EIA weekly crude oil inventories figure.

On a monetary level, ECB’s Elderson and Cipollone and the Fed’s Barr and Logan speak. In tomorrow’s Asian session, we get China’s Rating Dog services PMI for May.

Charts to keep an eye out

USD/JPY

USD/JPY continue to edge higher aiming for the 160.50 (R1) resistance line. On a technical level, we continue to maintain our bullish outlook for the pair, given also that the RSI indicator remains above the reading of 50, implying a bullish market sentiment for the pair. Should the bulls maintain control as expected we may see the pair breaking the 160.50 (R1) resistance line and start aiming for the 164.40 (R2) resistance level. Should the bears take over, we may see the pair reversing course aiming if not breaking the 157.50 (S1) support line, thus opening the gates for the 155.00 (S2) support level.     

BTC/USD

BTC/USD tumbled yesterday losing 6% and is currently aiming for the 64900 (S1) support line. We maintain a bearish outlook for crypto’s direction yet note that bitcoin’s price is at oversold levels and possibly ripe for a correction higher. Should the bears remain in charge, we may see BTC/USD’s price action breaking the 64900 (S1) support line and set in its sights the 59800 (S2) support level. Should the bulls take over, we may see BTC/USD’s price action reversing the losses of the past three days, breaking the 74200 (S1) support line, with the next possible target for bears being set at the 82900 (S2) support level.

USD/JPY Daily Chart

• Support: 157.50 (S1), 155.00 (S2), 152.10 (S3)
• Resistance: 160.50 (R1), 164.40 (R2), 168.00 (R3) 

BTC/USD Daily Chart

• Support: 64900 (S1), 59800 (S2), 53500 (S3)
• Resistance: 74200 (R1), 82900 (R2), 90500 (R3) 

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