The USD/JPY pair fell on Wednesday as traders continue to test the patience of the Bank of Japan. As the bank has recently intervened, and has stated several times that it is “monitoring the currency markets”, it seems that it is only a matter of time before they intervene again. Because of this, we do not recommend shorting this pair, even though it looks very weak.
As the 76 handle gives way, one thinks that the risk of intervention goes way up. Because of this, we can only buy this pair, but there is absolutely no technical sign to do so currently. Unfortunately, this pair is almost untouchable because of all of the uncertainty – just the way the BoJ wants it.
Written by FX Empire