The Japanese yen strengthened to the strongest level in 18 months against the USD on Tuesday, blocking the Japanese government effort to raise the inflation. The yen also strengthened against the Australian dollar after the Reserve Bank of Australia decided to cut its interest rate to the record low. Overall, the yen has strengthened about 12% against the USD this year after the Bank of Japan failed to add stimulus last week.
Japanese Prime Minister Shinzo Abe is scheduled to visit Italy and Germany in his European tour. He is expected to try to make an agreement in money market intervention ahead G7 meeting this month.
G7 members showed that they do not like intervention. On the other hand, Tokyo is sensitive about the issue that they are trying to depreciate the yen using extra-easy monetary policy. However, analysts expected another intervention if USD/JPY falls to 100, even though it has to be done during the Japanese Golden Week holiday.
A pull-back move has occurred to within the Fibonacci resistance area at 196.025-106.325. On hourly chart, 20 MA and 50 MA are falling. The price is testing 50 MA as well as the resistance at 106.325. Hourly stochastic and CCI area overbought, with CCI pointing down. Wait for bearish signal confirmation from hourly stochastic and CCI to go short with target at 105.840-105.541.
Watch the resistance area at 105.325. The intraday bias will turn to bullish if the price managed to break above 106.325.