(MENAFN- Daily Forex) The usd/jpy bounced a bit against the Japanese yen during the trading session on Monday, gaining over 1.5% by the time the Americans came on board. By doing so, it shows that the US dollar is trying to come back into favor, and quite frankly it's an oversold condition. What's even more interesting is that the ¥135 level seems to have attracted a lot of attention, an area that's been important in the past.
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The 200-Day ema sits in the same neighborhood as well, so that of course makes quite a bit of sense as well. That being said, I think it's probably only a matter of time before we see buyers coming back, based on the fact that interest rates started to rise again. Keep in mind this pair is very sensitive to the different shuttles between the 10-year interest rates of the 2 countries, and of course, the Bank of Japan has been doing everything it can to keep those rates down. If rates in America start to rally, then the only direction this pair can go is higher.Trying to Recover from Massive Sell of
Conversely, if we see interest rates start to drop from here, then it's possible that we could see a drop-down to the ¥132.50 level, maybe even the 130 level. All things being equal, this pair will continue to be highly sensitive to the interest rate differential between the 2 pairs, and of course what's going on in the US dollar. The Japanese yen continues to be a bit of a punching bag, so it does make a lot of sense that we would see the Japanese yen lose overall.
Ultimately, given enough time I think it's probably a situation where you see plenty of volatility , but at this point, we are trying to recover from a massive selloff that has been going against the longer-term uptrend. I do think that this pair is starting to show signs of life again, so with that being the case, pay very close attention to this chart because it could give you a bit of a heads-up as to where everything else is going over the longer term. The size of the candlestick is somewhat impressive, but only time will tell whether or not there is enough follow-through to send this market higher.
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