USDJPY bulls are on the move after losing 550 pips between May 11th and June 14th. In fact, buyers have struggled to do much of anything since December of last year when the pair topped out at 118.60.
With Monday’s session closing above the 113.25 handle, we were watching for a subsequent close above the newly acquired support level on Tuesday. Sure enough, buyers stepped up after running into some trouble early on.
So far, today’s session has picked up where Tuesday left off. The USDJPY just carved a fresh seven-week high while respecting the 113.25 handle on a daily closing (5 pm EST) basis.
As long as the pair holds above this level, I’ll maintain a slightly bullish bias. I can’t fully commit to an upside bias given the range-bound price action over the last few months.
As a side note, while typing this, the pair has lost 40 pips and is currently trading below 113.25 on an intraday basis. Where the pair closes today at 5 pm EST will be significant in the sense that 113.25 is now the proverbial line in the sand between buyers and sellers.
The 113.25 area remains a key support for now but as mentioned above, today’s close will be critical. Key resistance comes in at the May high of 114.35. A close above that would target the confluence of resistance at 115.00/10.
Alternatively, a daily close back below 113.25 would negate the bullish outlook and re-expose the 111.70 support area.
Keep in mind that today at 2 pm EST we have the FOMC meeting minutes. The event usually triggers some volatility for the greenback as traders reposition themselves. But given today’s rather indecisive price action, waiting for the session close at 5 pm EST would be prudent.
Want to see how we are trading this setup? Click here to get lifetime access.
