The USD/JPY pair has been negative over the last few days, with the Bank of Japan intervening in the last few days. This is a market that is currently hanging about the 50-Day EMA, which could offer a bit of support.
The US dollar has stabilized a bit against the Japanese yen during the early hours on Monday, which of course is something that was somewhat needed and quite frankly, I don’t think it’s that surprising. The ¥158 level is an area that’s been important multiple times, as it was a previous resistance, and now it features the 50 day EMA. At this point, I believe that we probably start to question whether or not we can bounce from here. And if we do, then I think it’s very likely we will go looking to the ¥160 level. Keep in mind the Bank of Japan has intervened yet again, but interventions are just simply an invitation for value hunters to come back into the market.
The question is whether or not people believe that the Federal Reserve is going to start cutting rates quick enough to make the interest rate differential sort itself out in favor of Japan, or at least not so bad. Right now, you can drive a truck through the interest rates of these two economies, and that is a major driver of what’s going on, so I remain bullish.
I’m just looking for some type of bounce and momentum that I can take advantage of, which will be a repudiation of the recent selling, but more importantly, a continuation of the longer term trend that has been such a major driver here. If we do break down from here, then the ¥155 level is your next major flaw in this pair.
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Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.