USD/JPY Fundamental Daily Forecast -Low Volume Expected Due to Bank Holiday; Watch Stocks for Guidance

James Hyerczyk

The Dollar/Yen is trading slightly higher early Monday. Volume and volatility are relatively low since today is a U.S. bank holiday. Last week, the price action was primarily driven by the sure in U.S. Treasury yields. With the Treasury market closed, traders will be rudderless. They may seek direction from the stock market which is open, however.

At 0312 GMT, the USD/JPY is trading 113.878, up 0.154 or +0.14%.

Japan is on a bank holiday also which only doubles the chances of a quiet trading ession. Low volume could lead to volatility, however, if a renegade trader decides to try to take control. Try to avoid getting caught on the wrong side of an attempted breakout. This type of move tends to fail under thin trading conditions. It’s probably best to keep your powder dry today and wait for the banks to reopen on Tuesday.


There are no reports scheduled for Monday so you’re on your own. Traders may decide to follow the price action in the U.S. stock market because of the carry trade. A steep sell-off in U.S. equity markets could drive investors into the safe-haven Japanese Yen.

Technically, the main trend is up. A trade through 113.522 will change the main trend to down. A move through 114.580 will signal a resumption of the uptrend.

The short-term range is 112.555 to 114.580. Its 50% to 61.8% retracement zone at 113.568 is support. This zone has held as support the last three sessions.

The main range is 110.379 to 114.580. If the trend changes to down then the selling may continue into its retracement zone at 112.480 to 111.984.

The major upside target this week is the November 6, 2017 main top at 114.728. This is a potential trigger point for an acceleration to the upside.

With the Treasury market and U.S. and Japanese banks closed today, it is highly suggested that do don’t try to press the market hard in either direction unless you have a solid exit strategy before you trade. This is because it’s easy to get caught in a whip-saw trade due to low volume.

Without any reports, the price action is likely to be dictated by the movement in the U.S. equity markets. Further downside pressure could keep a lid on any rallies in the USD/JPY because of the carry trade.

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