Crude oil insights of Japanese Yen, U.S. Dollar

While it is always challenging to make macroeconomic assessments based on technical analysis, it seems like CME Group WTI Crude Oil Futures and CME Group Japanese Yen chart (Yen-USD)  suggest a “risk-off” or “flight-to-safety” story.

First, let’s look at the weekly WTI Crude Oil chart below showing a descending triangle. If market breaks the $51/bbl. area it could set-up for a longer-term retest of $43/bbl. area. Although the Crude Oil chart as a standalone could simply mean overproduction (as we saw from 2014-2016), strength in the Japanese Yen chart suggests that crude oil weakness might mean economic softening, demand destruction and a flight-to-safety

Weekly CME Group WTI Crude Oil


In addition, the daily continuous WTI Crude Oil chart below tells a similar story, only here we are seeing a symmetrical triangle which has clearly broken to the downside. Note that a close above $61/bbl. might invalidate this economic weakening scenario and bring a retest of the $76/bbl. area. Such an invalidation could be the result of any number of bullish fundamentals including a trade agreement with China or some good economic numbers out of the US, China or Eurozone.

Daily continuous CME Group WTI Crude Oil

Now let’s look at the monthly CME Group Japanese Yen Futures chart (Yen-USD) below which is showing multi-year strength via the long-term uptrend line. While the monthly chart itself is not a risk-off, flight to safety story, more recent action in the weekly chart below, shows that the old resistance at .009400 area was broken at the beginning of August 2019 and has served as support ever since. This too supports our stronger Yen view and, together with the bearish view on Crude Oil, suggests the economy might be weaker than some pundits believe.

Monthly CME Group Japanese Yen Futures

That stated, a break of .009150 area (the 8/1/19 low), would invalidate our view. As stated above, such a break could be the result of any number of bullish fundamentals including a trade agreement with China or good economic numbers out of the US, China or Eurozone.

Weekly CME Group Japanese Yen Futures

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