Published: 2/19/2018 2:01:00 AM
USD/JPY has recaptured the 106.50 handle heading into European markets, with volumes thin through the Asia session as China's institutions are shuttered for the first half of the week to celebrate Chinese New Year. New York will also bring with it sedate amounts of traffic, as the US observes President's Day.
The Yen has been on an absolute tear against the US Dollar recently, with the USD declining for two straight months to a 15-month low as the Yen continues to strengthen despite constant sooth-talking from the Bank of Japan (BoJ), attempting to reign in the Japanese currency before a too-powerful Yen begins to hurt the fledgling economic growth Japan has just recently begun experiencing.
With a light showing on the economic calendar for both currencies, overall market sentiment will sway USD/JPY through the week, as traders balance risk appetite with increasing inflation threatening to begin lifting interest rates, crimping equities and bond markets.
Following a steep decline for the US Dollar, USD/JPY is deep into bearish territory, with the price trading far below the 200-day SMA and 34 EMA; H4 charts show potential for a turnaround to the 34 EMA at 107.11 if Dollar bulls can keep the pressure up, though resistance is marked in from 106.74, 106.84, and 107.42, while a return to short-selling will see USD/JPY coming against support at the 105.92 and the recent swing low of 105.55.
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