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US Stocks Down, JPY Up After NFP

ByGregor Horvat
Published 04/07/2014, 05:54 AM
Updated 07/09/2023, 06:31 AM

Morning traders! I hope that you had a great and relaxing weekend as markets can be very interesting in this week after strong sell-off on US stocks on Friday, after the US jobs report. We see markets in risk-off mode, but interesting that, despite a strong move down on stocks USD did not move much to the upside. We have seen a strong upward reaction on US Notes and German Bund market while stocks were falling which was ideal for lower USD/JPY and Yen crosses.

Market Correlation 30min
Market Correlation

Now the question that is probably going through your head right now is “if this risk-off will stay here or no?” Well I believe in the technical picture of the market swings. So if we take a look on the S&P then we can see five waves to the downside from 1892 down to Mar 30 gap. Decline is impulsive, thus it’s part of ongoing weakness, so we will be looking for more weakness after any short-term three wave rally. This three wave rally may occur soon if we respect gap levels that usual react as reversal zone.

E-mini S&P500 1h
SPX Intraday
So if we respect the bearish picture of the S&P then we may also consider a bearish continuation on USD/JPY and even take advantage of intermarket analysis. A decline there has also unfolded in impulsive fashion, so we may consider shorts with our members in the next 24-48 trading hours.

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