The yen is a popular asset during turbulent times.
In early trading this morning the USD/JPY hit a low around the 134.782 area temporarily, but since touching this ratio the Forex pair has reversed higher. The long term bullish run of the USD/JPY touched values not seen since 1998 recently and speculators may not want to give up on this higher territory quite yet. While the lower move the past handful of days maybe enticing, short term traders need to acknowledge a few considerations.
The USD/JPY was trading near 137.000 on the 29th of June and this morningâs low was a healthy dose lower with a recorded value of nearly 134.782 as written above previously. Â However, traders need to know that U.S financial institutions are on holiday today, and many of the American financial houses began shuttering their doors last Friday. While such a simple reason for a lack of buying from the U.S side may sound too easy, it is often the evident things that prove worthwhile.
Yes, the USD/JPY does look absurdly high and overbought, and speculative traders cannot be blamed for wanting to attempt contrarian positions which sell the USD/JPY. However, the long term trend cannot be merely ignored. Technical traders do have a reason to suspect the Japanese Yen is far too weak and will eventually begin to get stronger and make the USD/JPY move lower, but when this will take place is still an open question.
Short term support levels this morning seemed to cause a bounce higher, producing purchasing of the USD/JPY. Â With the absence of the U.S financial institutions until tomorrow, trading conditions are likely to remain choppy over the next twenty four hours. However, upon the return of full market volume to Forex, the USD/JPY is likely to search for equilibrium. If the USD/JPY is languishing below the 135.250 mark as of tomorrow, this may be considered a place to attempt buying positions and search for upside momentum.
The USD/JPY has shown a strong ability to trend and betting against this long term move to suddenly disappear in the near term may prove an expensive wager. Â The U.S Federal Reserve is maintaining its hawkish interest rate rhetoric while the Bank of Japan continues to remain dovish. These viewpoints are unlikely to change within the next couple of weeks. Support levels in the near term for the USD/JPY may prove to be intriguing places to ignite buying positions, which seek moves towards technical resistance the next couple of days as speculative wagers.
USD/JPY Short Term Outlook
Current Resistance: 135.610
Current Support: 135.130
High Target: 136.020
Low Target: 134.600
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