USD/JPY To Break-Out?
Over the past few weeks, the USD/JPY pair has been trading in a fairly tight range for the safe haven currencies. A bottom had been put in near 76 after the Bank of Japan intervened in the currency the last time the Yen saw that level vs. USD.
So there were many questions as to whether or not the Yen would be deemed a more “desirable” safe-haven as the risk aversion due to the Euro debt crisis picked up. Surprisingly, the markets didn’t really favor one over the other to this point, and the BOJ resolve to weakne the Yen was not re-tested.
Thus a range was created between 76-77 for USD/JPY and it had been trading there ever since. But now, with the vote for the EFSF having passed in Germany (they were seen as the biggest potential obstacle) the market may move back toward risk taking which should encourage US Dollar buying vs. the Yen. With clear support established at 76, a confirmed breakout above 77 means that we could be at 79 in no time.