The low yesterday touched 151.93 and that resonated with the May low before catching a bounce. The drive lower fell short of testing the 200-day moving average (blue line), seen at 151.58 currently. But still, sellers are in control with price having dropped by 4.5% already in July trading.
The pair might be slightly calmer for now but don't let that deceive you. Price action is very much still susceptible to volatile swings on the day, especially with the risk mood in a vulnerable spot and with the US PCE price index coming up.
S&P 500 futures are up 0.4% at the moment but the index itself is down nearly 2% already on the week. So, the minor bounce here is just a bit part reprieve.
Going back to USD/JPY, the focus now turns towards the BOJ policy meeting next week. Sellers still have scope to push the downside momentum to the 200-day moving average noted above. But I fear dip buyers will feel more confident once we get over the BOJ hump in the week ahead.
Despite the potential rate hike surprise by the BOJ, I reckon we'll see a sell the fact trade in the yen regardless once the dust settles. So, keep an eye out for that.
