Still down on the day
The USDJPY has pushed higher off the lows and has made new North American session highs in the last hour of trading.
Looking at the daily chart below, the pair bottomed last Wednesday (January 20, 2016) at 115.96 (lowest level since January 16, 2015 - so just over a year) and rallied higher as stocks recovered toward the end of last weeks trading. The move higher in the USDJPY stalled against the 38.2% retracement of the move down from the December 18 high. That level came in at 118.852. The high price on Friday extended to 118.869.
In today's trading (see hourly chart above), the high price in the Asia-Pacific session could only reach 118.85, and we have seen a rotation to the downside.
Technically, a move above the 118.69 – 85 area should solicit more buying in trading today/this week. All the lows and highs from Jan 4 to Jan 8th and then on Friday and today, along with the 38.2% retracement make it a key borderline area for traders. Move above and it is bullish (with 119.745 a target - the 50% retracement level). Stay below and the traders looking for more downside are happy.
On the downside, the swing high from Tuesday at the 118.10 level remains a level to eye today/this week. Below that the broken trend line (we tested that broken line on Friday's corrective move - see green circles in the hourly chart above) and the now rising 100 and 200 hour MAs (blue and green lines in the hourly chart) will remain key support levels/targets.
Fundamentally, the BOJ is reported to be mulling more stimulus. That should support the pair. S&Ps are down 8 points in relatively quiet trading so far today.
