USD/JPY Daily Chart
Yesterday’s low was touched at 151.93 and this was similar to the May low before it recovered. The decline failed to test the 200-day moving average (blue line), which we currently see at 151.58. But the sellers are still in control as the price has already dropped by 4.5% in July trading.
The pair may be a bit quieter at the moment, but don’t let that fool you. Price action is still subject to extreme volatility during the day, especially with risk sentiment in a weak spot and the US PCE price index rising.
S&P 500 futures are up 0.4% at the moment, but the index itself is already down about 2% for the week, so the slight uptick here is just a brief reprieve.
Coming back to USD/JPY, the focus now turns to the BoJ monetary policy meeting next week. Sellers still have room to push the downside momentum to the aforementioned 200-day moving average. But I fear that buyers will feel more confident once we get past the BoJ hurdle next week.
Despite the potential surprise of a rate hike by the Bank of Japan, I think we will see Sell the truth Trade the yen regardless once things settle down. So, stay tuned.
