The pair has observed a pretty solid recovery this week, as dip buyers are showing some courage. Japan intervened in trading last week to drag the pair down to 152.00, helped out by some softer US data. But since then, it has been one-way traffic this week in a push back up to near the 156.00 level.
The 50.0 Fib retracement level comes close near the figure level and that will be one to watch as we look to wrap up the week.
So, what’s next for USD/JPY?
For now, it seems like Japanese authorities are not having much appetite to meddle into things this week. That so long as the pair keeps below 156.00 and not overshoot towards 157.00 perhaps. A lot about the pair right now has to do with the psychological state of affairs.
And if we do hold thereabouts going into next week, all eyes will be on US data next to see how that will drive the next directional move. That won’t apply to the dollar, but also to the bond market as well. Do be reminded that the latter is also a key factor in impacting USD/JPY.
To put things short, Japan will likely want to wait on US data next week before taking stock of the USD/JPY situation again. That so long as there is no overshoot higher to compel them to intervene again. For now though, dip buyers are also still keeping the faith. But a change to the Fed outlook could help to change that conviction in the short-term.
This article was written by Justin Low at www.forexlive.com.
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