By FXEmpire.com
The USD/JPY pair rose sharply during the week as several members of the Bank of Japan started jawboning the value of the Yen down again. The markets certainly can remember the last two interventions in this pair as they were just a couple of months ago, and this will keep the sellers somewhat under control at this point.
The Federal Reserve Chairman also didn’t talk much about easing during his Congressional testimony on Thursday either, and since the market already knows that the Bank of Japan is ready to continue easing, this lends to the argument that the pair should go up over time. However, there are a lot of sell orders sitting all the way up to the 80.50 level. It isn’t until the pair is over that level that it looks safe to buy in our eyes.
The last two weeks if combined, would form a hammer, so we are starting to get a little more interested in the buy side of this market. However, as mentioned previously, there is a lot of “noise” above, so we are willing to wait. However, if we get that move- we think this pair could easily end up running higher to the 84 handle.
The selling of this market is off limits at this point as the Bank of Japan certainly seems ready to pounce if the selling gets to be too aggressive as the high value of the Yen is doing serious damage to that country’s export sector. With so much of the Japanese economy dependent on exports, this cannot make many in that nation happy at the moment. The large corporations in Japan are all struggling to sell their items in America as the value of the Dollar keeps falling against the Yen.
The pair will be on our radar, but in truth we are still a bit in “no man’s land” at this point. If we manage to break lower, we could buy below the 76.50 level as well, as intervention would be a foregone conclusion.
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Originally posted here
