USD/JPY Quietly Sinks Towards 80.00 Level
The USD/JPY has not garnered much attention as of late with all the U.S. Dollar rallying and EUR/USD pullbacks. The ECB and commodities have been grabbing headlines as the former has made it clear that June will not bring a raise in rates and the latter have been selling off, lead by silver and crude oil.
The USD/JPY is one of the few of the dollar-correlated pairs that is not in a clear trend. The daily chart reflects a market that has traded within a wide range since November 2010 and with the exception of the March earthquake and subsequent BOJ intervention. It now seems that as prices dove through the support of the 34 period EMA low from April 18 to 21 that the red GRaB candles on the daily are confirming the negative sentiment and bearish momentum in the pair as the yen strengthens over – what has been recently – a strong dollar.
The angle of the daily chart’s 34EMA Wave has begun to take on a more “four to six o’clock” angle and this could be the first glimpse of a more sustained transition into a downtrend. As long as the Federal Reserve stands by its message to keep rates low, look for the yen to start to gain visible traction against the dollar which is still correcting within the overall downtrend.
The 240-minute chart of the USD/JPY has been steadily moving lower within the mark down trend and keep strong resistance at the 34EMA Wave offering a number of short-selling opportunities on bounces.
Recall that on March 18, the G7 intervened to weaken the yen as it strengthened in the week following the March 11 earthquake. The intervention did indeed sharply weaken the yen as the USD/JPY rallied to 85.52 before reaching selling pressure and falling back to within the trading range that had formed late in 2010. The pair seems ready to break below the 80.00 although the brief breakdown to 79.56 did not attract selling pressure below the 80.00 major psychological level.
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