The USD/JPY pair did very little during the session on Monday, as markets overall were fairly calm. This particular pair continues to grind just below the 100 handle, which has obviously been very resistant lately. There is quite a bit of talk out there that massive options barriers reside above this one hundred level, and if that’s the case we will eventually see those options expire and this level give way to the buyers.
However, we feel that no matter what the reason, a break above the 100 handle will indeed send this pair much higher. In fact, we believe beginning above the 100 handle on a daily close will more than likely send this pair to 105 in relatively short order. Remember, this pair has been rocketing higher over the course of the last several months, so this stagnation really isn’t much to be concerned about as old the underlying fundamental analysis still holds true. On top of that, you of course have the meddling of the central banks when it comes to this particular pair.
The Japanese central bank has suggested that it is very comfortable between the 95 and the 100 handles in this pair, and as a result the markets might be a bit hesitant to try and breakout. Nonetheless, you can see that the lows are getting higher, and it almost appears as if we are trying to form an ascending triangle.
Written by FX Empire