Ahead of the release of this afternoon’s Federal Reserve Beige Book, the U.S. Dollar is trading weaker against most major currencies. This report shouldn’t be a market mover, but traders should read it to gain a little more knowledge into what the Fed looked at when it made its recent Federal Open Market Committee decisions.
The Japanese Yen is under pressure versus the U.S. Dollar at the mid-session after rising to a 15-year high against the Greenback. Strong moves in the equity markets are helping to revive the carry-trade, underpinning the USD JPY. The Dollar/Yen also got a boost this morning after Japanese government officials expressed apprehension about the rise in its currency.
Technically, the USD JPY is forming a closing price reversal bottom. This pattern, if confirmed, often triggers the start of a two to three day rally with a minimum objective of 50% of the last swing down. If this is the case this time, then look for a short-term retracement to at least 84.63.
The USD JPY chart will get most interesting if 84.28 is regained. At this time, the Dollar/Yen is set up for a weekly reversal, but a close over 84.28 will put the market higher for the week, forming a reversal bottom.
