Remaining Long on USD/JPY As MAs Hold As Support
Recently, the USD/JPY has been quite volatile. It fell on suggestions from the Bank of Japan to change policy, but rose after the BOJ failed to wow investors with a definitive move last week. The price then fell as the FED followed suit. Although it is currently reversing and going over 150.
Late last week, the USD fell when the Fed refrained from hinting at another rate hike. Treasury rates were falling, with the US 10-year notes falling below 4.50% which was dragging the USD down. However, we saw a bullish reversal in US bond yields on Monday, although they started declining again yesterday. But, the USD didn’t mind that at all, and in fact, it made some strong gains, climbing nearly 100 pips higher across the board.
This forex pair is looking like it wants stability above the round psychological level of 150.00, as market players’ aversion to risk has waned, dampening the attraction of risk-sensitive currencies. The price rallied quickly from 149.40 on anticipation that the US economy’s resiliency will justify more Federal Reserve (Fed) interest rate rises.
The Bank of Japan amended its monetary policy once more, thereby abolishing YCC. However, this encourages Yen sellers to stay confident until the next policy meeting in December, implying that the JPY might continue to fall and USD/JPY might increase higher.
Moving averages have done a great job in providing support for this forex pair, especially the 20 SMA (gray) on the daily chart, which has been holding the price during pullbacks on numerous occasions. Last week we saw two retreats to this moving average, but it held its ground very well and the price bounced off of it, so it seems like this is a good entry place for USD/JPY buyers. We decided to open a buy USD/JPY signal earlier this week as the price was in the middle of a pullback and now we are in profit as the price continues to bounce higher.
USD/JPY Live Chart
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