Dow Jones Declines Could Lead US Dollar and Japanese Yen Strength
Dow Jones Declines Could Lead US Dollar and Japanese Yen Strength
The Dow Jones Industrials Average started the day almost exactly flat with yesterday’s close, giving little guidance to the highly risk-sensitive US Dollar and Japanese Yen through early New York trade. Yet the key stock market index currently trades important support levels, and a break lower could easily force major moves in Dollar and Yen pairs. The correlation between the Dow Jones and the Japanese Yen remains at its strongest levels in at least 20 years, and the Yen will likely continue to trade lock-step with the key US stock market index.
An examination of shorter-term price action shows that the Dow Jones trades very close to the bottom of its recent trading range, and a break below 8,000 leaves little in the way of noteworthy support until 7,500. Said support line likewise coincides with a much longer-term price floor for the Dow Jones - emphasizing the importance of upcoming stock market price action.
US Dow Jones Industrials Average, 60-Minute Chart
The chart below shows that the Dow currently trades almost exactly at the bottom of its 10-year trend channel, and a break lower would likely lead to a move towards 2003 lows at 7,400. Such an occurrence would likewise confirm that the 10-year uptrend in the Dow has “officially” ended, and it would likely mark a larger shift in risk sentiment. It will be important to watch short-term price action in the Dow Jones - especially as it relates to longer-term trends.
Dow Jones Industrials Average, Weekly Chart
DailyFX
Disclaimer
Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Comments
No comments yet.
Sorry, the comment form is closed at this time.