The pair fell by roughly 1.3% yesterday, which was the steepest fall since Japan intervened in the market last Thursday. Before that, you’d have to look back to the start of May when Japan stepped in once again at the time. That speaks to the significance of the decline yesterday.
Still, it wasn’t one that had the typical trademarks of Japan intervening. Or at least in my view, the price action was not as clear cut as it was on Thursday and Friday last week.
Adding to that, there are a couple of other factors that might be of impact too. For one, we are seeing USD/JPY break below its key trendline support for the year as seen above from the white line.
Then, there’s the rotation play in Wall Street where the Dow is now outperforming as tech shares stumbled hard. Is it a broadening of gains after the narrow hot streak among the supposed Magnificent Seven? Or perhaps we’re seeing some response to the recent political happenings? It’s a tough one to pin on just one particular factor, at least for now.
Going back to USD/JPY, the pair remains pressured even with the slight bounce from earlier today.
The break of the key trendline above is putting sellers in a good position, with the 100-day moving average (red line) at 155.10 being eyed. The low earlier failed to test that but dip buying sentiment is rather fragile, so it wouldn’t take much for price to stumble once again. For now, sellers are in near-term control.
This article was written by Justin Low at www.forexlive.com.
