As of this writing the USD/JPY is trading near the 132.100 ratio with typical fast price action occurring. After coming off lows which were seen on the 4th of January when the USD/JPY traded below the 130.000 level momentarily, on Friday the USD/JPY reached a high of nearly 134.800. However, this happened as full volume was seeping back into Forex after the New Year holiday and importantly before the important U.S inflation data via Hourly Earnings came in lower than expected.
Suddenly the USD/JPY dropped like a ball and touched a low around the 132.060 level on Friday. Intriguingly for technical traders is the fact the USD/JPY did not challenge values seen on the 4th of January, the currency pair remained above key lower depths. With full trading volume now in play again, the USD/JPY does remain within eyesight of its lows achieved late in December and early January.
Speculators have plenty to Consider Regarding the USD/JPY
The USD/JPY achieved its lows when there was an absence of full trading volume. However, the fact that the currency pair remains within shouting distance of these lower depths indicates financial houses are staying rather bearish regarding their behavioral sentiment. A concern for trading institutions surely exists because of the upcoming U.S CPI numbers which will be published this Thursday.
USD/JPY Trend has certainly been lower but can it be sustained
- The bearish trend in the USD/JPY remains intact, but trading conditions have been choppy and perhaps tough on day traders trying to take advantage of the moves lower.
- Until Thursday’s U.S Consumer Price Index readings the USD/JPY is likely to remain rather cautious regarding results as financial institutions wait for the inflation numbers.
If the USD/JPY remains near the 132.100 mark, this will excite speculators who have a bearish perception of the currency pair and are tempted to seek selling positions. If support near 132.000 is proven vulnerable this could create a test of lower depths, particularly if trading is sustained below the 131.400 mark. Earlier results this morning saw a low of around 131.330, but traders should not get overly ambitious while targeting profits below. The ability to reverse higher is a warning sign.
The range of the USD/JPY may remain rather cautious in the near term as financial houses position before the U.S inflation numbers on Thursday. While some traders may feel inflation has been cooling, numerical proof of lower inflation is a key for trading houses to remain bearish regarding the USD/JPY. If a lower-than-anticipated inflation outcome is confirmed lower depths could be seen quickly later this week, but until the results are published it remains a speculative market, and traders need to bet carefully.
USD/JPY Short-Term Outlook:
Current Resistance: 132.280
Current Support: 131.950
High Target: 132.700
Low Target: 131.150
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