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Exhibits Noisy Behavior Amidst Support


Although the market may eventually reach the ¥148 level, it is crucial to acknowledge that this could be time-consuming. 

  • During Tuesday’s trading session, the USD/JPY showcased significant volatility, continuing the trend of noisy behavior.
  • Currently hovering around the ¥141.50 level, the market has experienced turbulence over the past few days.
  • However, robust support is anticipated near the ¥140 level, suggesting that the market will likely find substantial support over time even in a decline.

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It is important to note that the Bank of Japan remains committed to maintaining extraordinarily low-interest rates, adversely affecting the Japanese yen. Consequently, short the yen remains a prevalent strategy. The market’s focus is shifting towards reaching the ¥142.50 level, and a breakthrough at this level could potentially propel the market even higher. Forming a bullish flag pattern provides insight into a potential “measured move,” which suggests the possibility of the market ascending toward the ¥148 level.

Although the market may eventually reach the ¥148 level, it is crucial to acknowledge that this could be time-consuming. Regarding a potential deeper correction, the 50-Day Exponential Moving Average (EMA) currently resides near the ¥138 level and exhibits an upward trajectory. Previously functioning as a resistance level, the ¥138 level is expected to offer support as market memory comes into play.

The market’s noise persists, primarily due to the prevailing “one-way trade” dynamics. While volatility remains a characteristic of this market, numerous investors seek yield opportunities. Holding the US dollar against the Japanese yen, or virtually any other currency against the yen, allows for positive swap earnings. As the Bank of Japan reaffirms its commitment to maintaining ultra-loose monetary policy, the likelihood of a significant shift in this trade appears low for the foreseeable future.

The US dollar’s recent performance against the Japanese yen has been marked by volatility and noise. Support is expected near the ¥140 level, providing a foundation for the market to regain strength. The Bank of Japan’s ongoing commitment to ultra-low interest rates affects the yen’s value and continues influencing market sentiment. As the market eyes the ¥142.50 level, a breakthrough could propel the market toward the ¥148 level, albeit with potentially time-consuming efforts. Traders should consider the 50-Day EMA near ¥138 as a crucial support level, drawing on market memory. Despite the noise and volatility, the prevailing “one-way trade” dynamic remains intact as investors seek yield opportunities against the yen. Given the Bank of Japan’s monetary policy stance, significant changes in this trade are unlikely shortly.

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