Tuesday June 9, 2015 - 12:09:02 GMT
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Is USDJPY 125 the New 120?
After hitting a high at 122.02 on March 10, USDJPY fell back into a range focused on 120 for nearly two months before breaking out to a 13-year high above 125 starting in late May. As the chart below show, it settled into a range from March 23 to June 18 bounded by 118.33 and 120.85. Over that period, 68% of the closes were 119.xx, 24% 120.xx and 8% 118.xx.
With USDJPY hitting a high at 125.85 the question is will history repeat with 125 replacing 120 as the center of a consolidation range? One factor may be Japan’s PM Abe’s comments at the G7 that it was preferable that based on fundamentals it was preferable that forex rates be stable, suggesting that the government is not seeking a further depreciation of the JPY for now. Similar comments out of Japan were made earlier in the year that may have contributed to the near two month consolidation around 120. Currently, USDJPY has corrected off its 125.85 high set on June 5 after the strong US employment report in line with weaker equities.
So watch the 125 level to see if it replaces 120 as the focal point and whether this leads to a period of USDJPY consolidation. In this regard, keep an eye on the closing rates once the USDJPY correction finds a floor to see if history repeats, in which case, most of the closes would be 124.xx.
Jay Meisler, co-founder
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