Spring Storm Arrives! Current Situation and Countermeasures for the Turbulent Foreign Exchange Market

GWIn a forex market where the dollar-yen pair had broken above resistance and a buy signal was lit, the actual outcome has been a broadly stronger yen against all currencies. This time, we will consider the reasons why the yen strengthened.P＆F charts to analyze the current state of the forex market and possible countermeasures.[cc id=24719] 

Reasons for the yen’s appreciation

Concerns over intensifying U.S.–China tensions

From the timing of the Dow's slump, the sharp drops in forex, and President Trump’s remarks, the factor behind the rapid yen appreciation is believed to be Trump’s tariff hikes against China.

China also took some measures in response to the U.S. tariff hikes, raising concerns that U.S.–China tensions would intensify, contributing to the yen’s rise.

Dow Jones at a high not being renewed

Reference: Dow daily chart The red arrows (5/1) indicate4/23 and26,695 were not broken, which led to profit-taking accelerating the drop.

The Dow fell by about900 points. Meanwhile, the Nikkei was hit hard by the long GW holiday, opening large gaps and declining by over1,000 yen. 

If the Dow can hold above the75MA (25,814) without breaking, the market may enter a reversal phase for a while, but if it easily breaks the75A level, it will be difficult to judge how far it will fall.

For the Nikkei, whether it can hold at the near-term support line of21,000 yen will be a key point for the market. 

As seen, the market collapsed significantly because fundamental and technical crash points overlapped.

Also, in May, the market tends to sell-off due to seasonal factors, in line with the saying “Sell in May and go away.” It is prudent to avoid easy counter-trading. 

Current state of the forex market and countermeasures

Reference: USD/JPYP＆F charts

Continuation ishere

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