Gold and USD/JPY breakout together

The relationship between USD/JPY and gold is one of the most interesting intermarket stories around, according to George Davis, Chief FIC Technical Analyst at RBC Capital Markets. He points out that an inverse relationship between USD/JPY and gold has been present for over a year and that this correlation is now at its most negative since 2008.

In this vein, Davis argues that the recent bullish intermediate breakout in USD/JPY was accompanied by a bearish breakout in gold prices, and that these contemporaneous breakouts add more conviction and relevance to the price action. As such, he expects gold to test the key double bottom near 1179 and USD/JPY to test resistance at 110.6 and then 112.63.

USD/JPY and Gold

Key Double Bottom at 1179 in Gold