USD / JPY Trading Outlook
USD/JPY saw active trading yesterday opening in Europe at 77.33 and moving to a session low of 77.14 before moving higher during the US session to a high of 77.59. Overnight trading in Asia saw the pair range between 77.58/43. A muted response was received by Obamas employment speech. The BoJ has stated that uncertainty over global economy is a factor behind the yen’s rise. USD/JPY opened in Europe today at 77.49 and has recently seen a surge of buying trading the pair to high of 77.79 so far.
USD/JPY did little overnight trading in a tight range. There was buying interest at 77.20 to 77.40 but offers (to sell) came in at 77.50. IFR markets reports that these offers trail well into the 78 handle and beyond with exports looking to take advantage of upticks for their residual sales ahead. However, from a technical point of view, note that the initial resistance lies at 77.74.
USD/JPY finally made a break though the 77.25 resistance reaching high in the 77.70s before dropping back to 77.00. Traders now feel more comfortable buying here and the price has so far remained above this big figure. The BoJ kept target rate unchanged at 0.10% and announced no new monetary easing, according to the central bank they expect the economy will resume a moderate recovery. They also noted that they need to carefully watch how the FX market moves affect their economy.
USD/JPY also benefitted from the Swiss intervention with JPY weakening. This is no surprise since CHF and JPY are considered as safe haven currencies and a reason why they have become so strong. USD/JPY tested the 77.25 resistance but was unable to break this and retraced back to the 77.00 big figure. The market crowd is now deciding if the price should stay above this. Recently we have seen the price dropping out of this level as traders become nervous to buy there. Bank of Japan (BoJ) interest decision will come out later overnight they are expected to hold at 0.10%.
USD/JPY attempted to break into the 77.0s again but a similar pattern is emerging and traders are just not happy to buy at the higher level yet. The 76.50 support level remains maintain and was tested again on Friday after the NFP announcement. Later this week we have the Bank of Japan (BoJ) interest rate decision, we expect them to keep rates at the low 0.10% level.
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