USDJPY: Stay Long into FOMC Minutes
I entered long USDJPY at 81.09 as it followed up a bullish Piercing Line candlestick pattern with a break through falling channel resistance established from April’s swing top. I am expecting prices to rise along with US Treasury yields as the Federal Reserve allows QE2 to expire in June against a backdrop of increasing fiscal stress in the United States, pressuring borrowing costs higher.
The pair pulled back today ahead of the release of minutes from April's FOMC meeting, but I am not expecting the result to produce anything materially game-changing and will remain long, initially targeting 81.83, the 38.2% retracement of the 4/6-5/5 decline. A stop-loss will be activated on a daily close below 80.74.
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