And for now, the volatility in the yen continues to persist as such. USD/JPY itself touched a low of 153.01 earlier before keeping around 153.40 levels now. And the high in Asia trading was at 154.35, so that is a wide range already seen on the day. But the technical picture remains little changed overall:
The downside momentum is still largely holding with key support still seen closer to the May low at 151.85 currently. Then, there is also the 200-day moving average (blue line) at 151.60 to consider.
For now, the near-term bias stays more bearish as well with price action resting below the 100-hour moving average of 154.29. That is keeping sellers in near-term control.
The BOJ is the big event to watch out for this week. The central bank is set to announce tapering of its bond purchases, likely at a more gradual pace to start with.
As for a rate hike, it is still very much up in the air. Traders have been rather wary of that in the last week or so, especially so after this report: BOJ rate hike next week reportedly to be a “close call”
Still, I’d argue that we are setting up for a sell the fact play here on the yen once the dust settles from the BOJ. If not through the dollar, then arguably through EUR/JPY or AUD/JPY as risk trades look to be on the mend.
This article was written by Justin Low at www.forexlive.com.
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