Now that the Fed and BoJ decisions are behind us let’s take a look at where the USDJPY stands. And more importantly, where it may be heading from here.
Just a few days ago the pair was testing key resistance at 115.10. I mentioned this area twice last week including the bearish rejection that occurred following Friday’s NFP report.
At the time the pair was trading between 115.10 and (new) trend line support near 114.20. However, yesterday’s Fed-induced plunge put the USDJPY well below the new support area on a daily closing basis.
You may recall the 113.25 handle from the recent weekly forecast. This was the next support level that would come into play should the 114.20/30 area fail to act as support.
Yesterday’s low was 113.16, but buyers managed to close the session at 113.36, keeping 113.25 support intact for now. This leaves the USDJPY in a state of limbo. The pair has also been relatively indecisive since mid-January, which adds an element of risk for those attempting to trade this range.
But despite the somewhat choppy conditions of late, the pair has some of the better technical levels right now. On top of that, it’s respecting them on a daily closing basis which is more than can be said for some other pairs at the moment.
Until the 111.70 handle falls, I’ll remain cautiously bullish here. With that said, it’s still going to take a daily close above 115.10 to swing the pendulum in favor of the bulls following yesterday’s 137 pip landslide.
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