Just like the good old days: Yields, stocks, commodities, and USD/JPY all higher!

They all seem to be acting in harmony with one another

New Highs 3

Things seem like they are back to normal, regardless of Jay Powell says:  Higher stocks, higher yields, higher USD/JPY higher,  higher Crude.  They all seem to be acting in harmony with one another, just like the old days!  With a dovish Powell, one would think the yields and commodities may be lower. Powell doesn’t think much of the inflation (or employment) right now, however, bond traders disagree.  The 10-year yield reached its post pandemic higher today near 1.43%, its highest level since February 21st, 2020.  Strong horizontal resistance confluences just above at the horizontal and phycological round number resistance of 1.50%!  The RSI is also diverging,  which indicates a pullback may be coming soon.

Source: Tradingview, City Index

USD/JPY appears to be moving with yields since the beginning of the year.  USD/JPY put in a low on January 5th, near 102.60 and has been trading higher since.  The pair is currently nearing resistance at the 38.2% Fibonacci retracement from the February 20th, 2020 highs to the January 5th lows near 106.26.  If price breaks above there, the 50% retracement level is at 107.39. Price sliced through the 200 Day Moving Average today, which now acts as first support at 105.49, then horizontal support at 104.92 and 104.41.

Source: Tradingview, City Index

Everything you should know about the Japanese Yen | JPY price history

Even with a dovish RBNZ,  NZD/USD screamed higher today, up 1.6%, trading right into horizontal resistance near 0.7440. NZD/USD had traded higher out of a pennant formation and the target is near 0.7880.  However, the pair must first get through resistance at 2017 highs near 0.7555. The RSI for NZD/USD is also in overbought territory, indicating the pair may be ready to pull back as well.  The New Zealand Dollar is highly correlated to copper, which also put in 10-year highs today!

Source: Tradingview, City Index

Just for fun, with commodities, USD/JPY, and NZD/USD all higher, lets look at NZD/JPY.  As you may guess, it was also higher, up over 2% on the day.  The pair broke above the 50% retracement level from the late December 2014 highs to the March 2020 lows hear 76.97, as well as, horizontal resistance from December 2018 at 78.86.  The next level of resistance is at the 61.8% Fibonacci retracement level of the same time period near 81.05!  Support is back at an upward sloping trendline and todays lows near 77.07.  Again, take note of the RSI reading above 80.  Price may be ready for a pullback after such a large daily move.

Source: Tradingview, City Index

Although everything seemed like the good old days today, be careful.  As mentioned, a number of these instruments are nearing resistance and have RSI’s that are in overbought territory.  A pullback may be ahead!

Learn more about forex trading opportunities.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.