USDJPY is still trading inside a 100-pip range, providing an opportunity for support and resistance plays. The currency pair has been moving inside this rectangle pattern for the past few weeks already, as risk sentiment keeps the tug-o-war going between the two lower-yielding currencies.
On its 1-hour time frame, it can be seen that the pair is moving between 101.50 support, which is a minor psychological level, and 102.50 resistance – another minor psychological level. It has been bouncing between these two inflection points since the latter half of February, back when the tension in Ukraine heightened.
This goes to show that traders are conflicted when it comes to which safe-haven currency is better to hold in times of uncertainty. On the one hand, the US dollar is supported by the Fed’s decision to taper but traders are still doubtful whether this will carry on or not, as jobs data has been weak in the past few months. On the other hand, the Japanese yen attracts traders because the Japanese economy has shown significant signs of improvement recently and the BOJ is making progress in warding off deflation.
USDJPY Price Forecast
The pair barely tested the top of the range in today’s US trading session, as it popped to a high of 102.47 after the release of the ADP non-farm employment change report. Traders took this as an opportunity to catch the bounce and jumped in early, triggering a selloff back to the 102.30 levels.
Stochastic on the 1-hour time frame is indicating overbought conditions, which means that dollar bears have enough energy to push the pair back down. If this holds true, USDJPY might be on its way back to the bottom of the range around the 101.50 mark before the end of the week, unless the US NFP release sparks a volatile price reaction later on.
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