Yesterday’s two JPY positions are moving in opposite directions as I type, GBPJPY in the money and EURJPY out of the money. The JPY continues to look interesting and I have entered a further (and final) JPY LONG position. This time it is a short CADJPY. Entry was at 87.56 with a Target 1 at 86.34 (20 DMA support area, 14 DATR and above the 23.6 Fibonacci level). This position is against the longer Weekly and Monthly trend which have both turned positive. However, the daily chart shows bearish MACD, RSI and Parabolic SARS. Target 2 at 84.84 is above the 38.2 Fibonacci retracement due to the longer term trend change.
Meanwhile, and more in line with the longer trend, USDJPY has settled back in the mid 117s after failing to sustain gains above 118.00 earlier in the week, which had been seen after the BoJ left monetary policy unchanged and bank governor Kuroda ruled out a reduction in ETF purchases. There had been some speculation that the BoJ might have hinted at tapering given the weakness in the yen and rebound in oil prices, which is reversing two principal drivers of disinflation in Japan. In the longer term the 2016 high at 121.68, remains a possibility which was seen back in late January. The Fed’s tightening bias contrasts the BoJ, even though rising oil prices and the nascent weakening trend of the yen is pushing the Japanese central bank to a more neutral, if not hawkish, stance. The BoJ last week announced a ramp up in purchases of debt maturing in 10 to 25 years as part of its “yield curve control” policy.
USD-JPY support is at 116.89-90, ahead of 116.55. The 20-day moving average is presently some way below spot, at 115.67, and the 14-day RSI momentum indicator is presently at 72.01, putting the market above the 70.0 “overbought” threshold, suggesting that a buy-on-dips tactic would be a bullish strategy.
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