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The USD/JPY finally broke down during late hour trading in North America today. The pair as all but collapsed, driving rates as low as the 76 handle in an hour. This action certainly will get the attention of the Bank of Japan, and the trading world will be on pins and needles wondering what they are going to do.
While buying this pair on that idea is at best risky, certainly if you are not in a trade at the moment – the best move is to wait for stability. In moves like this, there is always a wicked snap back, (we are already seeing it start) and there could be intervention. The yen strengthening is something Japan doesn’t need at the moment, and certainly not at this rate.
The best advice is to leave the yen alone at this point. Most trades are going to be very vulnerable to whip saws at this point.
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More March 17, 2011 Technical Analysis:
