HSBC Economist: Risks Similar to the 1997 Crisis Could Return

The news headline, citing an HSBC economist's warning of risks akin to the 1997 crisis, could negatively impact market sentiment. Technical indicators show RSI at 45.68, indicating a neutral zone, while MACD is negative and below its signal line, suggesting short-term weakness. The price is trading below the SMA20 and SMA50, supporting the current downtrend. However, given the limited decline in the latest close and the potentially speculative nature of the news impact, a limited pullback is more likely than a strong selloff. Investors are advised to remain cautious and monitor support levels.

The warning of risks similar to the 1997 crisis in the news could heighten concerns about Asian markets and create short-term selling pressure on the Nikkei. Technical indicators present a mixed picture; RSI is neutral at 53.6, MACD is positive but very close to its signal line, and momentum is weak. The price is trying to stay above the SMA20 and SMA50, but the strength of these supports appears limited. The negative tone in the news flow could break the current sideways movement downward, but the decline should not be severe. In the short term, it is important to remain cautious and monitor support levels.

USDJPY continues its short-term upward trend, trading above the 20- and 50-day moving averages, with the RSI at 65 indicating strength but nearing overbought territory. The MACD remains positive and above its signal line, suggesting sustained momentum. While the news headline could dampen risk appetite, geopolitical risks typically support the JPY as a safe haven, which may limit upside pressure on USDJPY in the near term. Nevertheless, the current technical outlook takes precedence over the news impact, favoring a bullish bias. However, caution is advised due to overbought signals and potential news-driven volatility.

The risk warning in the news, reminiscent of the 1997 crisis, could have a cautious effect on market participants and may increase selling pressure in the short term. Technical indicators also support this outlook; RSI is in the weak zone at 46.5, and MACD is negative below the signal line. The price is trading below the 20-day moving average while hovering near the 50-day average, indicating a search for direction. However, the slight increase over the last 24 hours and the maintenance of the 50-day average as support suggest that the decline may be limited. Therefore, the probability of a downward move in the short term is seen as moderate.