Now that we’ve gotten the debt deal and government shutdown out of the way (for a couple of months anyway) we may see USD/JPY find some traction to the upside as traders continue to anticipate the beginning of the Fed’s tapering. There is concern that the shutdown has pushed back the start of the beginning of the taper, and while there is some validity to this, the Fed remains far more hawkish than their Japanese counterparts.
The pair has recently broken out of yet another wedge, and a retest of that wedge provides a low risk long entry. Major resistance continues to sit at 100.00, but if Japanese equities manage to push higher, we could see a significant rally in USD/JPY.
Written by: Liam McMahon, Currency Strategist – GlobalFxClub.com