USD/JPY has been consolidating loses during the US afternoon either side of the 97.50 level/ Flows have been light but dealers report a steady stream of small buy orders by US asset managers on dips this afternoon.
The one fairly interesting feature in USD/JPY of late is the fact that the three moving averages that I follow (10-21 and 200 day) are all spooled up within 30 pips of once another. This suggets a big move is ahead. Stepping back and looking at the fundamental backdrop, one would expect that move to come to the topside since risk aversion is easing. But risk aversion has been easing for several weeks with no sign of a breakout in USD/JPY.
What can’t go up often comes down, and maybe the moving averages are starting to suggest the USD/JPY is ready to come down big.
97.10/15 and 96.25 are levels to watch on the downside, near-term.