The USDJPY has been off my radar for a while now. I’ve intentionally avoided the yen due to the currencies high sensitivity to risk. With tensions running high abroad, things can get rocky in a hurry.
But although the safe haven status of the yen presents a challenge for the more risk-averse trader, there’s no denying that the USDJPY has some of the best technicals at the moment.
Just today the pair has settled into a confluence of support at 108.40. This is the intersection of descending channel support from the January 17th low and a horizontal level that’s been a factor since 1999.
If buyers can get behind today’s retest of the 108.40 handle, a move higher toward 110.10 seems likely. This is the location of two recent lows, one on March 27th and the other on April 7th.
On the flip side, should buyers lose 108.40 on a daily closing basis, we could see the pair slide toward the 106.40/80 support area. The region was responsible for several swing highs and lows between May and July of last year.
I’m going to play this one more cautious than most due to the reasons stated above. And until a favorable opportunity presents itself, I’ll remain on the sideline.
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