Yen Remains Directionless As Markets Await Next Catalyst
The USDJPY breaking above the 50-Day SMA at 90.56 triggered a long position but the pair has seen choppy price action since which has led me to close my position at a small gain. There is no clear pattern for the pair and with increasing downside risks I will remain on the sidelines until I see a break below 89.61-3/9 low. Having said that we are still seeing strength in other Yen crosses (AUD/JPY, GBP/JPY) which is a sign that risk appetite is still prevalent and we can’t discount the potential for Yen depreciation. The Fed committed to leaving rates at current low levels for an extended period has helped spur risk appetite as it increases the potential for domestic growth and corporate profits. We would need to see a break above 92.00 to consider getting long again as the longer-term trend line near 91.50 and the 200-Day SMA at 91.74 offer two significant barriers.
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