The USD/JPY fell to this year’s lowest level as demand for safe haven currency increased and China inflation data. The strengthening yen is not good for Japan’s economy. Weakening the yen is necessary in order to help exports and boosts inflation.
Worries that the Bank of Japan has run out of options to fight deflation have intensified after a sharp rise in the value of yen pushed the policymakers to talk down the value of yen in Tokyo.
From the techincal analysis point-of view, the yen still has the chance to strengthen again since USD/JPY remains capped by negative trendline on hourly chart. A pull-back move has occurred to within the Fibonacci area at 108.170-108.527. 20 MA and 50 MA are still falling on hourly chart. Hourly stochastic and CCI are overbought. As today’s trading strategy, we can look for bearish signal confirmation within the Fibonacci area with target at 107.966-107.620.
Note that the price is testing the negative trendline area. Be careful if the price managed to break the resistance at 108.527 because it will turn the intraday bias to bullish and possibly will be followed by a bullish move up to 109.773-109.087.