Intraday price action managed to print a bullish outside day bar at the close in NY (101.22 vs. 100.64), which formed at trendline support (July 24/Aug 2 troughs) and at a 38.2% Fibonacci retracement at 100.70 (Mar 21 –Jul 24 decline).
Regarding sentiment, the general risk-on tone seen Thursday weighed on the JPY, “and risk-reward given where the yen is relative to the recent range favors selling yen, not just against the greenback, but on the crosses as well,” says Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman.
The pairing continues to offer plenty of trading opportunities inside of the 100/102 trading range, according to Sean Lee, founder of FXWW. For now, EUR/JPY holds a slight bullish profile in early Asia, but remains practically unchanged at the 101.25 mark. Price looks set for further tests of the 200-day EMA in the hours ahead (today at 101.65). Above there, offers may lie just above the Oct 5 peak at 102.75. The downside offers support at 100.40 (Sep 7 high) and 99.20 (Aug 21 high).
Domestically, Japanese officials continue to have to deal with yen strength, the euro area crisis and the slow down in China. Mr. Chandler notes: “Traditionally, the best grounds for Japanese intervention is the G7 admonishment against excessive volatility. However, that claim, which Japanese officials have resurrected now, simply does not apply.