USD/JPY appears to have broken out of its recent downtrend on the daily charts.
It has been a very quiet day in Asia as much of the region has shut down or is shutting down for the Lunar New Year. Think Christmas Eve but with monsoons and you will get the picture. On a day of small ranges in the majors, one notable exception is USD/JPY which has risen some 70 tics steadily over the day. There seems to be now one driver of the price action apart from a higher than expected Rinban operation to buy JGB’s in the 5/10 year part of the curve, and a stronger USD generally. I would hazard to say that positioning is a lot more balanced now after the washout to 112.50 in the last couple of weeks.
Technically the move is quite significant. The downtrend line at 114.70 area is also the top of the daily Ichi-moko cloud today. A close above this level is quite bullish from a charting point of view. This now forms intra-day support.
Resistance appears at 115.60, the daily conversion line (in blue) and a previous daily high. After that, the December highs at 118.60 come back into play.
So as we roll into the Lunar new Year in Asia keep a close eye on where USD/JPY closes tonight in New York.
From Singapore, we wish all out readers, “Gōng Xǐ Fā Cái,” Happiness and Prosperity in the Year of the Rooster!