Both USDJPY and Gold saw a knee-jerk rally Thursday in response to the announce partnership between Russia and North Korea involving technology transfers to the latter. Over the weekend Vladimir Putin threatened to arm North Korea and allow the latter to re-export such arms to none state actors. This development has put Japanese vulnerability in the spotlight leading to the losses for the Yen.
Resistance
- 165.000 – Psychological
- 164.183 – 61.8 Fibonacci Expansion
- 160.192 – 30 year high
Support
- 159.125 – Intraday Consolidation High
- 158.668 – Intraday Consolidation Low
- 158.274 – Daily Consolidation Resistance
USDJPY saw two solid bullish candles from Thursday and Friday courtesy of geopolitical tensions. The rally now has us just short of 30 year highs, this as the stochastic indicator also suggests it is overbought. While we continue to advocate carry trades and just holding on to highs proximity to historic levels suggests no new buys until we see how the market reacts as we expect the BoJ to potentially come in and prevent further weakness for the Yen. We would suggest placing sell stops as prices approach historic highs to catch any BoJ intervention.
