The USD/JPY pair fell off of a cliff on the Tuesday session as traders ran into the safety of the Yen. The bullish thesis that we have had over the last several weeks has been beaten down, but there are a couple of major support levels and catalysts below.
The failure of the USD/JPY to rise began with the Bank of Japan failing to expand the asset buyback program that many expected. Because of this, the Yen started to gain. Adding to that is the fact that bond yields in Europe are starting to blow out again, and fear comes into play.
However, the 80 level below should be massive support. It was the site of a major breakout, and also is the 50% Fibonacci retracement level. The 200 day EMA is just below that area, so there is a real chance that the market will find support. It is at that area that we look to buy if we get supportive action. In the meantime, after a day like Tuesday it is hard to see the need to buy at the moment as the range closed at the absolute bottom.
Written by FX Empire