There has been limited news out of Japan of late with much of the recent swings for USDJPY more about whats happening in the US and consequently the dollar. The latest plunge of the pair has been on weak US economic data of late yet these numbers are not actually enough to convince the Fed to cut rates sooner. As such we continue to see Yen pairs as a carry trade and suggest buying on dips.
Resistance
- 158.440 – Daily High April 26
- 157.986 – Daily High May 1
- 156.49/77 – Tuesday’s Doji High / May 14 High
Support
- 155.593 – 20D Moving Average
- 154.700 – Previous Consolidation High / Low
- 153.587 – 50D Moving Average
Yesterday’s Doji and the presence of a prior high just above it suggests caution of USDJPY bulls. While we are an advocate of the carry trade the price point and candle pattern suggest it may be a good idea to book some profits and reposition from better levels. A break of yesterday’s lows could trigger such position squaring and would have us looking to buy a new as we approach the 50D Moving Average. Shorts may also be taken on such a break though stops need to be implemented above the doji high and we are unwilling to hold on to sells overnight.
