Trader, analyst and instructor with a 6-year experience

USD/JPY: trade ideas

Kira Iukhtenko, FX BAZOOKA analyst

The USD/JPY currency pair soared yesterday by almost 200 pips, posting a fresh 5-year high of 104.40. Buyers’ demand weakened in the Asian trade, but the greenback still holds above the psychological 104.00 support. Yesterday’s USD surge returned the pair into the bullish channel, opening the potential for further gains.

USD/JPY rally has successfully survived the yesterday’s FOMC meeting. The next event we should pay attention to will be the BOJ policy meeting and press conference on Friday. Most economists see no urgent need for the BOJ to make any changes in monetary policy. However, traders will be closely watching the policy statement for any hints of adding stimulus later in 2014. People familiar with the Japan’s regulator say the BOJ officials do see significant scope to increase bond purchases if needed to achieve the 2% inflation target.

As for the technical prospects of USD/JPY, I see 2 scenarios possible in the near term:

Trade idea 1. Buy USD/JPY at 104.40 with an initial target of 105.55 (The pair breaks above 104.40 and extends growth)

Trade idea 2. Buy USD/JPY on dips to 103.40 with an initial target of 104.40 (The pair dips to 103.40 before resuming growth)

Decline below the 103.40 support would open the way for a deeper pullback, but I don’t expect the yen to strengthen in the near term. 

Chart. H4 USD/JPY

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