Equity Markets to Dictate Direction of USD JPY

The Japanese Yen could be under pressure if the stock market begins another leg higher. Traders will be looking to sell the Yen and invest in higher yielding markets in carry trade activity.

The Japanese Yen could be under pressure if the stock market begins another leg higher. Traders will be looking to sell the Yen and invest in higher yielding markets in carry trade activity.

At this time the economy is still bad to warrant any buying interest. News that China’s economy may be going through a contraction is expected to worsen the economy in Japan.

A 7-10 day break in the USD JPY is often an indication of short-term exhaustion.  Based on the developing pattern a rally back to 99.55 to 99.99 is possible. Bullish traders would want to see the market trade through this zone to a new high for the move.  Bearish traders are likely to defend this zone.