The USD/JPY pair continues to see a bit of support below, as we are trying to sort out whether or not the 152-yen level will continue to hold the market up.
USDJPY
The US dollar rallied a bit against the Japanese yen in early trading on Monday, but keep in mind that the market is likely to be a little bit thin on Monday as the Americans were celebrating Presidents Day and therefore volume drops.
That being said, this is a market that looks like one that is trying to find some type of bottom, perhaps using the 200-day EMA as a bit of support.
Searching for Support Levels
If we were to break down below the 152-yen level, then it drops this market back down to the 150-yen level. The market right now is likely to continue to see more of a buy on the dip behavior as the Bank of Japan is currently stuck with a situation where the overabundance of debt is causing a massive problem, but at the same time you have to keep in mind that the debt being financed at a higher rate is unsustainable.
So, I do believe that over the longer term we will see this market turn around and go to the upside. The question of course will be whether or not it can happen anytime soon.
We are at an area that I think would be very interesting for a lot of traders, but if we don't see the market bounce from here, then the 150-yen level is the next area I look to buy. I don't have any interest in shorting this pair, quite frankly I don't like the idea of paying swap, and therefore I think we have a situation where we are looking at a market that has seen a few headlines cross the wire to spook it.
At the end of the day, it is worth noting that US economic numbers have been hotter than anticipated in general and therefore I do think that the buyers will eventually return.