USD/JPY: Technical momentum is lower but market lacks conviction

The narrowing range in the USD/JPY, start to finish last week was less than 10 points, and even the high and low registered just 75 points, evinces the market’s indecision. The pair has continued lower since the first week of November on momentum rather than from any conviction. USD/JPY is weak because its recent history has been weak not because there is logic to the cause, according to FXStreet’s Analyst Joseph Trevisani.

Key quotes

“There is no dollar advantage yet to be eliminated but there is no replacement for the trend so it continues aided perhaps, by the minor yield advantage Japan’s deflationary prices give to domestic interest rates. It is reinforced by the market’s regular adherence to the descending channel which dates to July 1 and provides structure.”

“The stasis of the last two weeks has a downward drift but it is due largely to the absence of conviction not to its presence. The more numerous and better-traded resistance lines and the descending channel help to keep bias down though without exerting much pressure. Support at 103.70 and 103.30 is robust.”