- The USD/JPY drifted a little bit lower during the trading session on Monday, to reach the lows of that massive candlestick from the Bank of Japan surprise.
- At this point, it looks like we are trying to break down a bit, maybe down to the ¥128 level
- It looks as if the markets are still banking on the Bank of Japan being successful in its yield curve control, and perhaps a lot of this comes down to whether the rest of the world is going to see rising rates are not.
- Keep in mind that the Bank of Japan must print yen to keep those rates down.
At this point, any time that we rally from here, I think you would have to be cognizant of the fact that the downward pressure is a very real problem. However, if we were to break above the 200-Day EMA, then it’s possible that we could see this market go a bit higher. However, I think we need to see some type of fundamental reason for that to happen, so in general, I think we have a situation where we are at a major inflection point in the chart. The market is more likely than not going to be very thin for the rest of the week, at least until we get the Non-Farm Payroll announcement on Friday.
Pay Close Attention to the 10-Year Yield
Because of this, the market is likely to continue to be a little bit negative, but ultimately, I think we will make a bigger decision once traders come back from the holidays. After all, the market will continue to be just getting back to work, and for that matter, Monday was a holiday in several of the world’s major economies.
In other words, you really can’t read too much into how the markets have been behaving over the last 24 hours, but ultimately, the market is likely to see more of a choppy type of attitude with a downward tilt than anything else as we await big news at the end of the week. Pay close attention to the 10-year yield in America, which could lead the way.
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