USD/JPY has been an interesting battle between two central banks that are trying to kill off the value of their own currencies over the last several months. In fact, the Yen has increased in value, and this means Japan has been “losing.” The idea of course, it to make your currency cheaper so foreigners will look to buy your exports.
The 80 level is a major one in this pair, and we have managed to break below it and hold for some time now. However, there is a lot of support in this region, and it looks as if the market is worried about the Bank of Japan below. The area just below currently levels is indeed the area that the Bank of Japan tends to step into the markets and get involved, either vocally or through intervention.
The action lately hasn’t been that spectacular, but when you think about the serious risk events that are going on – namely the Greek elections, it makes sense that this pair would be a bit silent. The next concern will be to see if the Federal Reserve is going to ease more. If it does, this pair will fall rapidly. However, if it doesn’t, and shows no proclivity to do so – this pair will shoot straight up as we all know that the Japanese are working against the Yen.
80.50
80.50 is the level I want to see this pair close above on the daily chart in order to get long of this pair. I am not ready to buy just yet, as the market can certainly whipsaw a bit from time to time. The areas below could be interesting as a buy as well, as the 78 level seems to be the start of an area that the Bank of Japan starts to get a bit more aggressive on their “weak Yen” stance. I am interested in buying supportive candle below the 78 handle because of this. As for selling, I cannot get comfortable with going against a central bank at this point. This is especially true with the Japanese who are very quick to pull the trigger at times.
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