USD / JPY – The BOJ Effect

For the most part of last year, the Yen was in decline loosely forming a descending triangle with the support level at 78.00 .  It was experiencing a little roller coaster ride during that time and the 78 level consistently supported the Yen and temporarily halted its steady decline, in the face of strong evidence it was going to fall lower.  It has been a completely different picture since, however.

In early October, the Yen again bounced off the 78 level however this time it was able to sustain its movement higher as it broke through a couple of likely resistance levels along the way. Since the middle of October, there has been an impressive strong move higher as the Yen has only moved in one direction.   This has resulted in the Yen trading at levels not seen in two and a half years amid extensive discussion about the BOJ.   During the last couple of weeks, the Yen has met resistance around 90 which has seen it just ease off a little.   This price action is similar to what was seen less than two weeks ago before the Yen continue higher again.

In the last day, we have seen the BOJ announce new measures to tackle their economy.  Although, the Bank of Japan's decision to hold off on fresh monetary stimulus for a year puts pressure on the Abe administration to revive growth through fiscal measures.

(Daily chart below)

USD/JPY Long – Short Ratio

(Shows the ratio of long vs. short positions for the USD/JPY. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

USD/JPY Technical

• During the early hours of the Asian trading session on Wednesday, the USD/JPY has consolidated a little by trading in a narrow range between 88.60 and 88.70.
• The last few months have seen the Yen move higher strongly pushing off the key support level at 78.00 and moving towards trading levels not seen in its two and a half years.
• Current range: Just below 89.00 around 88.60.

Further levels in both directions:

• Below: 88.00, 87.00 and 86.00.
• Above: 89.00 and 90.00.

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