USD / JPY Trading Outlook
opened in Asia at 78.05 and experienced typical tight range trading (78.00/78.07) and reduced volatility with good support found at 77.97. Just before the European open, a high was seen of 78.11 but soon fell again hitting a European session low of 78.00. The Boj intervention seems to be holding well so far, with rumours circulating that there could be a second round due.
USD/JPY has had an exciting week thus far with the BoJ finally intervening in the country’s currency issues at the start of the week taking the pair from a low of 75.57 to a high of 79.51. Since Monday, the pair has slipped to a low of 77.76 but has rallied slightly over the last 2 days and managed to stay above 77.97 which is proving to be a strong support level. Typical range trading took hold of the pair overnight, opening in Asia at 78.09 and not dipping below that crucial support area.
USD/JPY has taken a tumble this morning on USD weakness over the usual Japanese yen safe haven buying. It has fallen from 78.40 down to 77.95. The BOJ’s data suggests the intervention on Monday totaled approximately JPY 7.7 trn (over 61 bln GBP) which surpasses the previous record from August 4. This reveals the strong intention of the BoJ to keep their currency weaker. There are no signs that they will defend a floor on the USD/JPY price like the Swiss has done for EUR/CHF (at 1.2000) but with three interventions this year it certainly shows that the BoJ are not prepare to let the market form its own direction. They believe that speculative trading forces USD/JPY down and hence the strong yen does not reflect its true value.
From a technical stance USD/JPY found a comfort zone above 77.75, the level the price fell back to after the last intervention. If the pair moves back up offers are seen from 78.50 to 79.0 which would prevent the price from moving higher. Trading Central evaluate the pair as under pressure reporting the pivot point at 79.00 with a preference to sell below this with initial profit target (support) at 77.20.
USD/JPY retraced off the 79.50 highs down to 77.80. The Bank of Japans actions are having the desired effect with the pair now trading in the 78’s where in the previous week it traded from 75.50 to 76.30. The market remains jittery following yesterdays large move and overnight the pair briefly spiked to 79.10 on thoughts that another intervention was taking place. This was soon cleared and the price returned to the low 78’s only to trade sideways. However, the sentiment is that the pair may move higher in the near-term with the Japan Finance Minister Azumi threatening more action.
USD/JPY jumped from 75.60 lows to 79.50 as Japan intervenes to weaken the yen. The pair, last week, took another tumble as the turmoil in Europe continued and investors turned to the yen as a safe haven currency. This is the third intervention this year and was widely expected since the yen’s strength was undesirable for a country that heavily relies on exports. Unlike Switzerland we do not expect Japan to set a target exchange rate; Japan is a much larger economy and setting a target would be frowned upon globally. From a technical stance 79.0 is the pivot point and 77.2 the near-term support. Trading Central has commented that the pair is turning down and is under pressure.
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