The USDJPY – on a relative basis – is more contained. The pair has remained within the trading range over the last 2 days (see blue box). The high found resistance against lows from last week, and also a downward sloping trendline (see blue circles). On the downside, at the lows traders came in early against the low from yesterday at 116.06 (the low today could only get to 116.23).
USDJPY trades in a range.
Currently, the price has moved back above the 38.2 to 50% of the days trading range (see yellow area). This suggest that the buyers are taking more control after finding the buyers before the lows from yesterday. If the price is above to stay above the 117.00-08 area now, there could be a push back toward the trend line and top resistance levels at 117.70-93. I get the feeling the pair may be happy trading between the extremes for now.
Fundamentally, the Empire manufacturing data was better today and PPI ex-food and energy also was higher. Jobless claims were weaker, but given the holiday volatility, it may be seasonals. Stocks in the USD are rebounding as well which could be more supportive to the pair.
Understand that risk is increased today. Although the USDJPY is relatively calm, there could be a lot of cross currents that make the trading more choppy. Be patient and define your risks.
