BoJ Finance Minister Fujii warned at the G-7 meeting of possible intervention if the Yen saw biased price action. The Japanese government appears to be uncomfortable with recent Yen strength and the threat of involvement may generate a floor of support under Yen crosses. Therefore, we could see limited volatility from the low yielding currency increasing its attractiveness for scalping techniques.
[B]Key Technical Levels[/B]
The USDJPY was already trading in a tight 150 pip range over the past week as the potential for intervention has increased. Minister Fujii led to an extreme contraction of the price range which recently led to brief break out. Despite the recent volatility Yen crosses should see downside risks limited with the intervention threat, which will increase the chances of continued range bound price action.
[B]Quantitative Metrics [/B]
The USD/JPY has started to see volatility diminish which has its ATR back on the decline and currently standing at 110 pips. .However, it still remains higher than the levels we saw in early September. A sizable Bollinger band width and an implied volatility of 13.61 are negatives for scalpers.
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