Forex technical analysis: What was that? USDJPY on a rollercoaster ride

Technical Analysis

Author: Greg Michalowski | usdjpy

Race up and race down.

The USDJPY raced higher by 40 pips moving away from the 109.00 level.  It then moved sharply lower back to the "scene of the crime" around the 109.00 level. Option related?  Perhaps it was.  The 10 AM option expiration is now gone and we get a comment from BOJ Kuroda saying that current pace of purchases will continue for some time AND if FX appreciates, timing of hitting 2% may be delayed.  Back up in the USDJPY (lower JPY).  

This is what it look likes on the 5 minute chart. 

Taking a look at the USDJPY on a hourly chart, if Kuroda is concerned about the JPY getting too high, we should see the pair moving away from this low area. 

The price has now moved above the 200 hour MA at 109.244. Staying above would be more bullish going forward. The next targets come in at 109.44 (38.2% of the move down from the April high). Above that and the 109.849 will be eyed.

Technically, the pair today bottomed near some key support  from the 100 hour MA and the 200 day MA at 108.72-80 area.  Staying above that and basing from that is more bullish from a broader perspective. 

Taking a bigger step back, the daily chart shows the 50% of the move up from the June 2016 low is at the 200 day MA level.  So not only are we back above the 50% but are also back above the 200 day MA.  Stay above is more bullish.  

Finally, the USDJPY has been tied to US rates.  The US 10 year moved to a low of around 2.16% this week from a recent high of 2.63%. We are back up to 2.242% now. There was 38.2% retracement support at 2.13%.  If the fall in yields is over, that too may help a rebound in the USDJPY. Where is the next target for the 10 year?  2.30% was a key floor that was broken. It now a key ceiling.