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Without any major Japanese or U.S.economic reports on Tuesday, the USD/JPY is going to be subject to demand for safety or demand for risk. Monday’s strong U.S. PMI manufacturing report encouraged greater demand for higher risk assets so traders bought the Dollar/Yen Forex pair. Mid-session comments from Fed Chairman Ben Bernanke also supported the equity markets, putting greater pressure on the Japanese Yen to the benefit of the U.S. Dollar.
The strength in the equity markets suggests that this bullish bias is going to continue on Tuesday. Additionally, the Japanese Yen is trading close to an area that attracts the wrath of the Bank of Japan so it is susceptible to an intervention. This action would also trigger a surge in the USD/JPY.