Two-Sided Trade Dominates USD JPY

A two-sided trade dominated the USD JPY on Friday. Early in thesession, traders bought up the Yen over concerns the U.S. was going tolose its top credit rating. Further strength was triggered by anoptimistic statement from the Bank of Japan. The daily reversal up is indicating that a short-term bottom may be forming.

A two-sided trade dominated the USD JPY on Friday. Early in the session, traders bought up the Yen over concerns the U.S. was going to lose its top credit rating. Further strength was triggered by an optimistic statement from the Bank of Japan.

In a prepared statement, the BoJ upgraded a previously released negative comment by saying “economic conditions have been deteriorating, but exports and production are beginning to level out.” 

Late in the trading session, the USD JPY rallied after the Bank of Japan announced that it was no longer seriously considering an intervention as a means to weaken the currency. This reversed a down move from earlier in the week which was triggered by a BoJ “verbal intervention.”

Like all countries that rely primarily on exports to boost its economy, do not believe that the central bank is not paying attention to currency prices and export numbers. Although our Fed is not too concerned about the value of the Dollar, the Bank of Japan takes a different view and will not hesitate to take action to weaken the Yen under the right circumstances.

Technically, the USD JPY is in a downtrend but found support in front of the March 19 bottom at 93.53. The daily closing price reversal bottom which was formed at 93.84 on Friday will be confirmed on a breakout over 94.91 next week. Although this formation will not change the trend to up, it is a strong indication that the buying may be greater than the selling at the current price level.

James A. Hyerczyk has been actively involved in the futures markets since 1982. He has worked in various capacities within the futures industry from technical analyst to commodity trading advisor. Using W. D. Gann Theory as his core methodology, Mr. Hyerczyk incorporates combinations of pattern, price and time to develop his daily, weekly and monthly analysis. His firm, J.A.H. Research and Trading publishes The Forex Pattern Price Time Report... More

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