The USD/JPY pair rose slightly during the session on Monday as the bounce back from Friday’s selloff fails to impress. However, it should be noted that with the hurricane in the United States, the liquidity dried up during US trading. The 80 handle is obviously still the epicenter of all things in this pair, and as such we will continue to monitor what happens in this general vicinity.
Truthfully, a break above 80.50 is an extremely bullish sign as this market will more than likely have a clear path to the 84 handle at that point in time. The breaking down of this market below the Friday’s lows will more than likely send is looking for 79, and then more than likely 78 after that. The area has been a massive consolidation area over the last several months, and as such it will take some kind of massive decision to push the market in one direction or the other.
The Bank of Japan continues to work its magic against the Yen, but it’s fighting the Federal Reserve which unfortunately for the Japanese is probably the world’s best central bank when it comes to killing the value of its own currency. With this being said, this pair is essentially going to be a tug-of-war between two countries that are trying as hard as they can to lose.
If we can get above the 80.50 level however, it appears that 84 is a safe bet. We been there before, but that’s exactly where we fell from in order to fall into the range that we are currently trading and. We are not ready to sell this pair quite yet, at least not for any length of time. Any selling that we would do would be closed at the 78 handle as we believe the Bank of Japan will continue to come up with new schemes and bond buyback programs in order to trying to devalue the Yen overall. With this being said, we actually prefer going long of this market, but need the 80.50 level to be overcome first.
Written by FX Empire