Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Technical Analyst, Saxo Bank
USDJPY was rejected on Friday at the 0.382 retracement of the July bear move at 149.42 and resistance at around 149.35.
The sell-off has continued this morning, resulting in RSI falling back below the 40 threshold, confirming the bearish outlook for USDJPY with downside potential to 143.35–142.85.
However, a move down to strong support at around the medium-term 140.25 should not be ruled out.
A daily close above 149.42 will reverse the bearish outlook for USDJPY
EURJPY was rejected at its 200 moving average and resistance at around 164.00. The downtrend is set to resume.
Currently testing minor support at around 160.55, a decisive break is likely, which could fuel a sell-off down to around 157.30, possibly dipping to the 0.786 retracement at 158.03.
RSI showing negative sentiment is back below 40, indicating lower EURJPY levels.
To demolish this bearish picture and reverse to a bullish move, a daily close above 164 is requiredGBPJPY was rejected at the 200 daily moving average and resistance at around 191.90.
RSI is indicating that GBPJPY is likely to see lower levels, and a break below 187.85 could fuel another sell-off, quite possibly to 183.20.
A close above 192 will demolish the bearish picture and send GBPJPY towards 197.65.