US 10-Year Yield, USD/ZAR, USD/JPY and HG Forecasts – Rates Pull Back to Kick Off Thursday

US 10-Year Yield Technical Analysis

The first thing that I’ll look at is the 10-year yield, which has been the case for some time now and I just don’t see how that changes anytime soon because it can give you a good read as to how the day is going to go, especially as we have so many concerns about the Middle East and energy shocks.

Early on Thursday, we seem to be seeing a little bit of a double top form in rates. That’s a good sign for risk appetite and risk assets. If we can continue to drop from here, that should be good for pretty much anything that isn’t the US dollar. We’ll have to just wait and see. The 4.30 level seems to flip a switch. I don’t think we will get there today.

USD/ZAR Technical Analysis

The US dollar did initially try to rally against the South African rand but has failed at the 200-day EMA. It is because of this that I am looking at shorts for the time being, perhaps for a return to 16.5.

If we were to break above the highs of the day, then there’s even more resistance near the 17 level, which I would look for another shorting opportunity. It’s not until we break above 17.25 that I start to think that maybe the trend’s over. The South African rand has a higher interest rate attached to it, so you are also going with the swap.

USD/JPY Technical Analysis

The US dollar has fallen against the Japanese yen after officials in Japan hinted at possible intervention. This, more likely than not, will just set up another buying opportunity, maybe at 159 yen. If we drop to there and bounce a little bit, then that could be a nice entry.

If not, then I’ll be looking at 158.5 yen and again at 158 yen as the longer-term outlook for this pair is still strong.

Between falling rates and Japanese verbal threats, that was enough to cause a little bit of a pullback because at one time, we had actually pierced that level of 160.40 that I’d been talking about for some time, which is a swing high going all the way back to 1990. I think the Japanese are getting worried and rightfully so.

Copper (HG) Technical Analysis

The copper market looks positive for the day. If we can jump back over the $6 level, then I’m going to have a go at $6.15, maybe just a little bit lower than that. Pullbacks should be buying opportunities anyway.

Structurally, copper is definitely under-supplied, but part of what we’re seeing is that interest rates work against it, and of course, general fear. That being said, it’s kind of hard to go against the idea of electrification, artificial intelligence, data centers and everything else. So with that, I am looking to buy copper during this little bit of a bounce.