Nick Nasad
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USD/JPY: Retrace Following Sharp Slide As Markets Catch Breath

When it comes to a day after the rout in risk sentiment that we had to end last week, for me I will always be looking at the JPY currency crosses, as they are the best gauge for flows based on risk/carry trade.

  • Therefore, I'll start this week by looking at the USD/JPY, which had interesting price movement, with a retrace of the sharpest falls from Friday.
  • The pair started the week by falling below 102, but stayed below that level only briefly, before rebounding and now finds itself testing the area near 103.
  • This is a pivot from Friday, and is also the 55-hourly EMA. If the pair was to reverse and continue with the dominant swing from Thursday/Friday then this could be an interesting place for it to do so. 
  • A failure to move above this resistance level at 103 would mean a push back down to 102, and depending on momentum a retest of the lows from overnight.
  • On the other hand, if the pair manages to push higher however, then the 103.55 pivot is the next upside target and level of resistance that I would watch for.
  • I will have to see how things develop today before I start to hone in on a particular bias, and will be watching the USD/JPY closely for further clues.