The BOJ is in Focus

USD/JPY Charges Toward Yearly Highs

Posted Tuesday, September 25, 2018 by
Shain Vernier • 1 min read

The USD/JPY has been charging hard to the bull over the last four sessions. Rates have continued to rally, putting in a firm test of the 113.00 level. Will the recent strength continue until the FED weighs in on the U.S. economy and dollar tomorrow? We certainly going to find out.

During Monday’s U.S. overnight session, the Bank of Japan (BoJ) and Governor Kuroda released the BoJ Minutes as well as a formal speech. Kuroda’s comments reinforced the notion that the BoJ will continue to take a dovish stance toward the JPY. Citing the need for 2% inflation, Kuroda issued a bold statement regarding the BoJ “maintaining powerful monetary easing.”

Traders have reacted accordingly, sending the USD/JPY toward its yearly high water mark (113.38).

USD/JPY Technicals

All in all, September has brought windfall profits to those long the USD/JPY. Values are up almost 200 pips, with buyers consistently queuing up bids throughout the month.

USD/JPY, Daily Chart
USD/JPY, Daily Chart

Bottom Line: A short from the Triple-Top formation in the USD/JPY may be a nice trade setup ahead of tomorrow’s FED-dominated U.S. session. For the remainder of the trading day, I will have sells ready to go from 113.26. With an initial stop at 113.51, this trade produces a tidy 25 pips using a 1:1 risk vs reward ratio.

Timing will be everything for this short trade. If it has not gone live ahead of Wednesday’s FED announcements, then scratch entry. It is better to play it safe in the midst of a primary market moving event instead of fading the prevailing uptrend.

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About the author

Shain Vernier is our US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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