JPY Crosses Technicals – Slight panic post Amari comments but no changes in big picture

Japan Finance Minister Amari was quoted saying that yen has corrected to a level in-line with fundamentals, which came as a surprise because it suggest that Japan and BOJ are ok with current Yen levels – meaning further intervention to weaken yen will most likely not come. Yen strengthened immediately following the quote, with panic buying as speculators close off their positions. However, after the panic has subsided, it came to traders attention that there could be a misunderstanding due to translation:

Amari actually said Yen is CORRECTING, not corrected. What a difference a change in tense can make. This actually does feel more like the Japanese stance we’ve come to familiarize ourselves with. BOJ has always maintained that Yen’s “fundamentals”, whatever that means to BOJ, should reflect a much weaker Yen. While the only reason why Yen is so strong is purely due to those dastardly speculative actions of all the mischievous traders. Whether BOJ’s assertion is valid doesn’t change the fact – BOJ will still want to weaken Yen.

Understandably, Yen crosses begin to rise back with prices crossing back into previous consolidation zones. Below are simply 2 of the many charts that look similar due to Yen’s influence dominating almost all crosses chart shape.

EUR/JPY Hourly Chart

Price crossed back above the 119.0 support, with the sell-off not low enough to threaten the rising trendline nor even reach the previous consolidation region around 118.0.

GBP/JPY Hourly Chart

Same on GBP/JPY where 143.0 support is back, placing the range 143 – 144.5 back into focus. Unlike EUR/JPY, prices this week has maintain new highs. Bears will be glad to note that the sell-off happened just above 144.0, setting up for a nice Head + Shoulders Pattern with 143 as neckline. Failure to break above 144.0 will be a monkey on bulls’ back as the threat of a bearish breakout lingers.

USD/JPY Hourly

Finally USD/JPY showing some sign of weakness as price broke the rising trendline with the panic sell-off. Unfortunately for bears, price appears to have found some support along 88.70, and also 88.20 seemingly untested. A move back to 89.70 may trigger further bullishness as an indication of a return of bullish intent.

BOJ is scheduled to meet on 21st and 22nd Jan 2013

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