JPY demand picked up after Bank of Japan held monetary base unchanged along with interest rates and debt purchases and announced only an expansion in the size of its ETF purchases.
USD/JPY was offered at 50-DMA level of 105.55 and dipped to a two-week low of 102.70; before a bullish price-RSI divergence on the hourly chart helped the pair recover to 103.66 levels.
Outlook
USD/JPY was offered at 50-DMA level of 105.55 and dipped to a two-week low of 102.70; before a bullish price-RSI divergence on the hourly chart helped the pair recover to 103.66 levels.
Outlook
- Pair’s erratic drop to 102.70 followed by a recovery to 103.66 on the back of bullish hourly price RSI divergence suggests the bears are not in with their full strength and thus acceptance above 103.61 (head and shoulder neckline level on hourly) would open doors for further recovery to 104.19-104.60 levels.
- On a larger scheme of things, we need a day end closing above 106.64 (38.2% of 2011 low-2015 high) to signal bearish invalidation and trend reversal.
- On the lower side, daily low of 102.70 risks being breached for 102.00 levels if the hurdle at 103.66 holds and is followed by a red candle on the hourly chart.
