USD/JPY continued to sit still on Monday as traders play “ping pong” with the 76 – 77 range. The Bank of Japan is currently working against appreciation of the Yen, and the USD/JPY pair is the main one that the central bank will focus on. The recent trend is to buy when the pair gets lower, around the 76 to 76.50 level, and to sell it off as we approach the 77 to 77.50 level. The market seems fairly content to sit still and trade in this extremely tight trading range. While we are not sure which way it will break in the long run, we do know the Bank of Japan has made it clear that they will intervene if the pair falls too quickly. Because of this, we are buyers, but only down near the 76.25 level and taking short-term gains, mainly of the 50 pip variety as this seem to be the limit of the current trading range. Selling is tricky, as the threat of intervention still remains.
Written by FX Empire