USDJPY has had a decent move overnight and then as demand ceased has since reversed but don’t be disheartened by this price action, it gives us another dip to reload with the close yesterday more convincing for further gains. The first session of the week did little to inspire with EUR feeling very overweight against most currencies which actually hampered USDJPY price action given the bias to sell EURJPY which seemed ongoing for most of the session.
This pair could now re-test the 133.50 congestion level which we visited on the last test of the downside. Rallies will be sought after for technical bears and anything back towards the 136.00/75 zone would be an acceptable entry point. Of course all this is ahead of the BoJ which kicks off its two day meeting today. Nothing untoward is expected from the CB and Kuroda will likely focus on the recent events in China and Greece and if USDJPY is below the 125.00 radar point, hopefully he will leave that alone too.
So with this it all point to a return to long USDJPY and short EUR against a basket but rallies would be better entry point as opposed to dips as a spike could be on the cards should any jitters resurface from the recent ‘deal’.