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USD/JPY Technical Analysis: Digesting After Seesaw Volatility

USD/JPY Technical Analysis: Digesting After Seesaw Volatility

Ilya Spivak,

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Talking Points:

The US Dollar is in consolidation mode against the Japanese Yen after two weeks of wild seesaw volatility as prices await further direction cues. The pair plunged to seven-month lows amid a breakout of risk aversion in the second half of August, dipping toward the 116.00 figure only to swiftly recover to within a hair of the 122.00 mark.

From here, a break below near-term support at 119.22, the September 2 low, initially exposes the 38.2% Fibonacci expansion at 118.21. The first layer of resistance is at 120.69, the September 2 high. A move back above that clears the way for a challenge of the August 28 top at 121.73. This barrier is reinforced by trend line support-turned-resistance set from mid-January, now at 121.98.

An actionable trade setup is absent for now. Prices are too close to support to justify entering short from a risk/reward perspective. On the other hand, the absence of a defined bullish reversal signal suggests that taking up the long side is premature for now. Furthermore, on-coming event risk by way of the US jobs report threatens to materially alter technical positioning. With that in mind, we will stand aside for now.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.