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Japanese Yen price forecast 15 February 2021

2021-02-15

2021-02-15

Yen uses old ties. Forecast as of 15.02.2021Dmitri Demidenko

In the second half of 2020, the greenback reacted actively to the change in global risk appetite. In 2021, the Japanese yen does this. What are the consequences for the JPY? Let’s discuss the market outlook and make up a trading plan for [USDJPY][1], [EURJPY][2] and [AUDJPY][3].

Fundamental Japanese Yen forecast for six months

While humanity only dreams of picking up the threads of an old life, financial markets are actively doing this. The old ties, which had been relevant for ten years, were broken from 2018 to 2020 due to trade wars and the pandemic. In 2021 investors start to turn to them again. Those who do it first will get the opportunity to make the most significant profit.

If for the stock market, the [S&P 500][4] and the VIX volatility index are the best indicators of investor risk appetite, then for Forex traders, it has traditionally been the [AUDJPY][3] pair. The Australian dollar was considered to be a profitable currency due to the higher rates of the Australian debt market compared to other issuers of G10 currencies. The yen was ranked among the main funding currencies and safe-haven assets. Donald Trump’s protectionist policies and the pandemic have turned everything upside down. The RBA significantly eased monetary policy, Australian bond yields went down, and some investors began to use the AUD as a funding currency against the EM currencies in carry trades.

The return of financial markets to a normal state made [AUDJPY][3] the main indicator of traders’ risk appetite again. This is proved by the pair’s growing correlation with US stock indices.

Source: Trading Economics.

While the Australian dollar is supported by confidence in the global economic recovery and the booming commodity market, the yen is under pressure from the vaccination process and relentlessly rising US debt market rates. Last year, I wrote that because of the Fed’s large-scale monetary stimulus, the dollar took away the status of the main safe- haven asset from the yen. However, the rally in Treasury yields suggests that there has been a return to old values. In my opinion, this makes the yen the main Forex outsider in 2021. The steady growth of the [Nikkei 225][5] also puts pressure on the Japanese currency.

Looking at how the [S&P 500][4] hits all-time highs, investors want to buy US stocks though knowing the risks. The fact that the stock index has risen to an unprecedented height increases the risk of a pullback. Another thing is the [Nikkei 225][5]. It reached 30,000 for the first time since 1990, but it is still far from the record high of 38915. Buying Japanese stocks by foreign investors while hedging currency risks by selling the yen is a bullish driver for [USDJPY][1] and other related pairs. This connection worked for years and was broken in 2018-2020. But in 2021, it returns to the game again.

Dynamics of [USDJPY][1] and Nikkei 225

Source: Trading Economics.

I have often been talking about the yen as the Forex outsider in 2021 and [recommend entering][6] [USDJPY][1] and [EURJPY][2] long trades with targets at 107-108 and 129-130. The Australian dollar, by contrast, has been my [favorite][7] since March. When one currency is steadily going up, and the other is going down, it would be nice to squeeze the maximum out of Forex by buying [AUDJPY][3] with targets at 83 and 84. It would be nice if the [S&P 500][4] pullback would allow traders to buy the pair cheaper.

Price chart of USDJPY in real time mode

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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  1. my.liteforex.com/trading/chart?symbol=USDJPY&returnUrl=true
  2. my.liteforex.com/trading/chart?symbol=EURJPY&returnUrl=true
  3. my.liteforex.com/trading/chart?symbol=AUDJPY&returnUrl=true
  4. my.liteforex.com/trading/chart?symbol=SPX&returnUrl=true
  5. my.liteforex.com/trading/chart?symbol=NI225&returnUrl=true
  6. www.liteforex.com/blog/analysts-opinions/japanese-yen-from-favorites-to-outsiders-forecast-as-of-18012021/
  7. www.liteforex.com/blog/analysts-opinions/aussie-passes-a-hurdle-forecast-as-of-10022021/