The Japanese Yen remains volatile and heading lower on overall Dollar weakness. There is a tug o’ war between risk appetite and risk aversion keeping trading in most Yen pairs mixed. The preliminary reading of the University of Michigan consumer sentiment rose to 70.2 in Mid September from 65.7 in August. Data was above market consensus as analysts estimated a reading of 67.0. Stocks were briefly in positive territory but reversed gains quickly. Wall Street performance will continue to be key for the pair.
Looking at the 4hour chart, USD/JPY broke below the 91.00 area and appears to be targeting the next support at 89.98. The outlook at the moment remains bearish and trader talk intensifies for calls to reach the 87.15 area in coming weeks, last years low.
If these level is reached, a long entry can be taken at 0.8730 with a first target at 88.72. A strong Yen is undesirable for the Japanese economy and we would expect government officials to start jawboning the levels.
The bias is bearish and preferred strategy is to sell on rallies. However, a neutral stance should be taken near this area as strong support levels are being reached and risks of verbal intervention intensify. The next level of support is 89.98, followed by 88.72 and 88.03.
Resistance is now seen at 90.91, followed by 91.81 and 93.34.
Trading levels in play:
(Swing Trade) Limit Buy @ 87.30 Targets: T1 100.00 – T2 94.40 Risk: 86.80
** After 30 pips profit move stop to entry, take profit at will. Trade is canceled if it rebounds near entry and moves higher by 20 pips. Will follow up with comments if outlook changes.
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