USD/JPY Daily Chart
The pair fell by about 1.3% yesterday, the biggest drop since Japan intervened in the market last Thursday. Before that, we have to look back to the beginning of May when Japan intervened again at that time. This indicates the importance of yesterday’s drop.
But this was not the kind of event that the Japanese markets usually witness. Or at least in my opinion, the price action was not as clear as it was last Thursday and Friday.
In addition, there are two other factors that may also have an impact. First, we see that the USD/JPY pair is breaking the support level of the main trend line for this year as shown above by the white line.
Then there’s the spin game on Wall Street, where the Dow is now outperforming badly battered tech stocks. Is this an extension of gains after a narrow run of gains among the supposedly great seven? Or are we perhaps witnessing some response to recent political events? It’s hard to pinpoint one factor, at least for now.
Coming back to the USD/JPY pair, the pair remains under pressure even with the slight bounce it recorded earlier today.
A break of the major trend line above puts the sellers in a good position, with the 100-day moving average (red line) at 155.10 as a target. The previous low failed to test this but the buying sentiment on the dip is rather fragile so it wouldn’t take long for the price to stumble again. For now, the sellers are in control in the near term.