USD/JPY: Traction will be difficult to sustain [Video]

USD/JPY

The rally within the medium term range has been scuppered as a “bearish engulfing” daily candlestick formed yesterday to break the mini recovery uptrend. The momentum in the move has been lost as Stochastics are crossing back lower this morning and MACD lines tail off again even before they have got above neutral. This serves as a warning that even in a moment of risk improvement (as we have seen in the past couple of days) the dollar is struggling against the ultra-safe haven yen. It very much re-iterates the need to have a neutral strategy on Dollar/Yen as traction will be difficult to sustain. The reaction around the previous breakout band 107.45/107.60 may now begin to determine whether this market turns corrective again. The hourly chart has been neutralised as momentum indicators and moving averages all flatten off. If resistance builds at 107.60 again, then pressure will grow on 106.80. In front of Nonfarm Payrolls, this is a cautious looking market now. Resistance of yesterday’s high at 108.15 is growing in importance.