Despite the market’s risk-off stance the USD/JPY pair has rallied in the past two trading days off last week’s low at 106.92. April saw a new fiscal year for Japanese investors who have sold massive amounts of stocks and bonds since the March 31 fiscal year end. USD/JPY closed at 108.45 in New York, trading to a high at 108.68, March 31 highs. Overnight low traded was 107.801.
The Commitment of Traders report (week ended 24 March) saw speculative JPY long bets cut to +JPY 23,863 from +JPY 32,935 the previous week. The relative smaller size of positioning in the JPY explains why it’s the 6th in terms of implied volatility change in the chart at 10.45. In the past, USD/JPY has shown more extreme volatility. Its likely that we will see more volatile times ahead for this currency pair.
USD/JPY has immediate resistance at 108.70 followed by 109.00. The next resistance level can be found at 109.30. Immediate support lies at 108.30 and 107.80. Look for a likely range today of 107.80-108.80. Prefer to sell rallies from here.