USD/JPY Poised To Test 2017’s Low

In the wake of the ongoing news coming out of the World Economic Forum in Davos, USD values continue to sink. One of the biggest movers is the USD/JPY, down over 60 pips on the session. In lockstep, the Nikkei 225 is diving, down over 125 points for the second consecutive day.

Tough talk out of the Trump administration is the catalyst for the move. As the situation unfolds over the intermediate-term, the Bank of Japan may be forced into action in preservation of the export sector.

USD/JPY Technical Outlook

For the third consecutive day, the USD/JPY is experiencing sustained bearish pressure. The heavy selling has brought several macro support levels into view.

As of this writing, the USD/JPY is trading near intraday lows around 108.70. The bear trend has slowed a bit near the 78% retracement level of Sept. Low/Nov. High (108.94). After withstanding repeated tests, this area is on the verge of giving way.

There are two important support levels to watch for the near future:

• Support(1): 78% Sept. Low/Nov. High, 108.94
• Support(2): 2017’s Low, 107.31

Overview: In the face of such heavy one-sided participation, it is difficult to take a trade without a valid sign of trend exhaustion. While I expect this market to rotate around the 78% macro retracement level for the near future, immediate long entry is too risky.

Today’s forex close will provide the setup for a Friday trade in the USD/JPY. Until then, check out the signals page for live trade ideas facing a variety of asset classes.