USDJPY Sidesways Because BoJ Ineffective, Traders Indecisive
Updated
Trend trading would indicate via EMAs that we should see some lower levels. Moreover, short-term resistance and short-term support are form a symmetrical triangle and given the steep degree of the angles of the wedge, it seems as though some dramatic fundamentals would be required to force this pattern into either an upside or downside follow through of the wedge. For central bank fundies, the BoJ is clearly the most ineffective central bank in using monetary policy to impact its markets. Any move then by the central bank is probably going to be responded with a collective shrug. In the end, this pair is mostly driven by event risk of which recently is fairly weak. Equity markets (Nikkei 225 and Nifty) are getting crushed. My inclination is that this will trend lower since we are in an extended cycle and the yen is a safe haven asset. However, this may not be for some time since traders are relatively indecisive on whether or not the pair can continue its short-term uptrend or if the bears in other asset classes will take over causing a more longer-term extension lower.
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