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After The Storm: Trading USD/JPY

After The Storm: Trading USD/JPY

Those who follow good analytics were warned yesterday about impending volatility and strong counter-directional movements, and those who managed to draw the right conclusions, remained in profit. It is much more interesting to analyze what the markets can expect tomorrow and in a week. From the published statistics, the market will receive data on the volumes of retail trade, however, without a strong deviation, the published data should not significantly affect the currency markets. On the daily USD/JPY chart, the price came close to the local resistance level around 111, and it would be extremely challenging to overcome this level with ease.

The fact is that the yen has been in the price range of 108-114 almost the entire year, and as the present shows, it feels very comfortable in these levels, approaching the lower border, as it has a week ago, gathering strength and heading in the opposite direction. Of course, it’s not magic. Just the amplitude of the price movement, in percentage terms, is inferior to more volatile pairs, such as, for example, the USD/CAD. In addition, a price below the 108 mark also looks extremely attractive because there are currently no fundamental reasons for a further strengthening of the Japanese currency. We can admit that the correction for the dollar from local lows has taken place. In turn, the dollar index has grown over the past week enough to technically take a pause.

Next week, the markets will learn about the FOMC decision on the basic interest rate, followed by a press conference, and the next day the Bank of Japan will announce its decision on the interest rate, also holding a press conference. Another hot week will shake the currency markets.

In the dry balance it turns out that, other things being equal, the Japanese currency will take a breather at its current levels and will wait for the main news mentioned above. In this situation, it is advisable not to hold positions on the pair USD/JPY, and after the decisions on the monetary policy of the Bank of Japan and the Fed are published, enter the position of the trend from the current level at that time, and exit the position when the price will approach the upper or lower boundary of the channel. We wish you profitable trading!

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