By FXEmpire.com
The USD/JPY pair has been one that most trader have been following lately. While the market has been selling off, there are many dynamics at play in this market currently. The pair features both central bank easing at one time, and as a result we have had an interesting ride.
The pair is currently coming up to several different supportive elements at one time though, so we are at an area that decisions will have to be made. The 80 level is one of the most obvious support and resistance levels in this pair at the moment, and was also the site of a massive breakout back in February. This level could provide a ton of support because of that move, as traders will want to join in on the bullish run that have missed out on it.
On top of the significance of both the large round number and the breakout point, the 80 handle also have the 50% Fibonacci retracement level to help the support as well. Because of this, a lot of those same traders will become even more interested in going long as we have a confluence. Also, on the daily chart we have the 200 day exponential moving average just below the 80 handle as well. When there are this many reasons to get involved, it is difficult to ignore.
The Bank of Japan has just announced that they were going to expand asset purchase programs by ten trillion Yen, and this should continue to weaken the Yen overall in the future. The fact that the Federal Reserve Chairman suggested that the Fed would be willing to take monetary action if the economy stalled seems to have a lot of traders thinking of quantitative easing 3, but in fact he didn’t say what the parameters were, and in fact didn’t even suggest how close the Fed was to doing this. With that in mind, there is a real chance of a bounce from 80, and we are willing to buy supportive action in that area. As for selling, we don’t at the moment.
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Originally posted here
