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It has been a quiet day in the fx market today. There has been no economic data and little to jar the market out of its quiet state.
The lazy market has given us a chance to take a look at some charts and USD/JPY is flashing some interesting signals. The week-long run-up ended with a failure at the 200-day moving average on Friday. Today the market attempted another push higher but it has faded and the dollar is now in negative territory against the yen. We also have downtrend resistance and uptrend support to contend with as we search for the initiation of a medium-term trend.
We aren’t willing to commit too strongly in one direction or the other. The rejection of the 200-day moving average even as stocks have been rising is the clearest signal we have seen. However, the rejection came at the end of a strong uptend and an overbought correction was to be expected.
We think there could be another test of the 200-day moving average and we would prefer to be long is it breaks. If USD/JPY can close above the 200dma it will also likely break downtrend resistance and should test the recent high of 93.65.
We would turn bearish if the pair falls below 90.