Floor Caving Under USD/JPY?

The 95 price level for USD/JPY has served as very strong support over the past few months and now that the currency pair is trading well below that price level, it appears that the floor is caving in.

The following chart illustrates the significance of the breakdown. USD/JPY is trading in sell zone, which we determine using Bollinger Bands and the break of the 50% Fibonacci retracement of the January to April rally that took the currency pair from 87 to 101. The 10-day SMA is also crossing into the 200-day SMA suggests that USD/JPY could fall as low as 93.

What is driving the move in USD/JPY?

Yesterday, I posted a chart of the correlation between USD/JPY and U.S. Stocks. The S&P 500 erased its earlier gains and is now trading in negative territory which explains the latest breakdown in the currency pair. Here’s another interesting chart that confirms my belief that USD/JPY is headed lower. Three month LIBOR rates are slipping and USD/JPY has an uncanny way of trailing short term rates.

About Kathy Lien 236 Articles

Kathy Lien is an Internationally Published Author and Chief Strategist of DailyFX.com, one of the world’s most popular online websites for currency research. Her trading books include the highly acclaimed, Day Trading the Currency Market: Technical and Fundamental Strategies to Profit form Market Swings (2005, Wiley); High Probability Trading Setups for the Currency Market E-Book (2006, Investopedia); and Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game (2007, Wiley). As Chief Currency Strategist at FXCM, Kathy is responsible for providing research and analysis for DailyFX, the research arm of FXCM. She also co-edits the BK Forex Advisor, an Investopedia.com Premium Service with Boris Schlossberg – one of the few investment advisory letters focusing strictly on the 2 Trillion/day FX market.

Kathy is also one of the authors of Investopedia’s Forex Education section and has written for Tradingmarkets.com, the Asia Times Online, Stocks & Commodities Magazine, MarketWatch, ActiveTrader Magazine, Currency Trader, Futures Magazine and SFO. She is frequently quoted by Bloomberg, Reuters, the Wall street Journal, and the International Herald Tribune and has appeared on CNN, CNBC, CBS and Bloomberg Radio. She has also hosted trader chats on EliteTrader, eSignal and FXStreet, sharing her expertise in both technical and fundamental analysis.

Visit: Kathy Lien

Be the first to comment

Leave a Reply

Your email address will not be published.