It has been a recurring theme this week to see the Japanese yen pick up some bids in the handover from Asia to Europe. And in the overall picture, the yen itself is firming across the board despite the dollar also holding its own against the rest of the major currencies bloc. And that comes despite Treasury yields holding relatively steady in the last few days.
There's not much of a major catalyst behind the drive lower in USD/JPY. But one can argue that dip buyers have lost much of their appetite, after Japan intervened in the market on 11-12 July. That led to a break below the key trendline support (white line) for this year. And inevitably, that is sapping much of the positive momentum in USD/JPY.
The latest drop today is a crucial one as it not only threatens a break under the 155.00 mark.
But the 100-day moving average (red line) at 155.35 is also looking to give way at the moment. And that will see buyers relinquish further control of the pair in the bigger picture. The last time the pair traded below the 100-day moving average was all the way back in March.
The June low of 154.52 will be a minor support level to watch next. That before we get to the 38.2 Fib retracement level at 153.66 potentially.
It looks like the yen might still stay buoyed until we get closer to the BOJ policy meeting next week at least. Are we setting up for a sell the fact trade here for the yen?
