USD/JPY has been trading sideways for quite some time now after hitting its recent high at 103.72 back in May, but the recent US government shutdown has worn on the pair, pushing it below 98.00. There is a major confluence area sitting at just around 96.00 or about 140 pips below current market price, where the 200 day EMA meets round number support and a previous range low and bears are likely targeting this area over the next week or so.
What will happen after price hits 96.00 remains to be see, but the significant support there, combined with the threat of another Japanese stimulus program, meant to offset the recent sales tax hike may provide the spark for the resumption of the major uptrend in the pair. If the US government sorts out this current mess, the dollar should get a boost against the yen as well.
Keep one eye on 96.00 and the other on the newswires; it could be a very interesting combination.
Written by: Liam McMahon, Currency Strategist – GlobalFxClub.com