The USD/JPY fell during the session on Monday, even managing to clear the 100 level which should have been massively supportive. Because of this, this will have a lot of people shaken out of this trade, and could perhaps spark selling in Asia overall when it comes to the stock markets. However, this would have been predicated mainly upon poor ISM numbers out of United States during the session, and that being the case we have to wonder how long this will continue as the non farm payroll number comes out on Friday. After all, that is by far one of the biggest drivers of this currency pair over the longer term.
The Bank of Japan still is looking to devalue the Yen going forward, and because of this we feel that this market will certainly bounce going forward. At this point time though, the question is probably going to be more about timing than anything else. Because of this, we feel that we need to see this market close back above the 100 level on a daily chart in order to start buying again. We think that there is a high likelihood that this will end up being a buying opportunity, as the indices in the United States all look very positive for the Tuesday session. In fact, two of the three major averages in the United States formed hammers at absolutely perfect spot.
Looking at this chart, you can see that there was an ascending triangle that we managed to break out of, and now we have certainly retested it. The question then becomes whether or not the of trend line hold as support from that triangle, because it quite frankly has to for the buyers to have a strong case.
We think that ultimately, this market will continue up to the 105 handle, but there will have to be some relatively decent economic numbers coming out United States in order to push that. Quite honestly, the whole thing that driving this market at this moment time is whether or not the Federal Reserve will taper back on its quantitative easing process. This is why the economic number during the Monday session rock the market so hard, and exactly why a good non farm payroll number could push his market right back up like this never happened.
Written by FX Empire