What caused USD/JPY to drop so much today?

No news releases of worth that could
have an impact on this pair today, and
nothing much on the docket until
a Fed speech this aft…
Puzzled? You bet!

[QUOTE=“PipMeHappy;493222”]No news releases of worth that could
have an impact on this pair today, and
nothing much on the docket until
a Fed speech this aft…
Puzzled? You bet![/QUOTE]

The 100 sma crossed the 200 sma approximately 4 hours ago signaling the market to make a bearish move.

This is why it’s important to forget about the news and always follow moving averages.

That is such good advice…but JK
at DailyFX, for example, would
be reminding us, rightly, that news
such as the NFP for thr USD cannot
be ignored. Therefore, it is not all
talk, and no substance: seasoned traders
organise their calendar appropriately,
and will watch both price action and
fundamentals… Would you agree, in part,
with that approach? What works for you?

To me, combination of price action and news really help decide more correctly what to do…

China complained that the new Japanese economic policy is merely directed at grabbing export share from other Asian nations. The YEN has depreciated more against the Chinese renminbi and the Korean won, resulting in large export growth for Japan.

China hinted that there could be retaliation against the policy of Japan through currency intervention or trade restrictions. China went so far to say the ”… YEN IS A LARGER ISSUE THAN WHETHER NORTH KOREA LAUNCHES A NUCLEAR MISSILE.”

The Chinese are very upset by the Japanese monetary policy and its global impact.

Another way to look at it is: news (& all economic events) are already factored into price

The USDJPY could have dropped so much because it got to a key resistance zone (where it hasn’t been for a while), and found orders to go short waiting there ( + traders taking some profits after super-strong uptrend ).

The 100.00 level (very big round number) is a logical level for longs should price retrace to it.

Monthly and Daily charts below

Cheers



.

Well, this is due to this:

The Bank of Japan confirmed today the level of interest rates (0.10%) as well as the actual monetary policy, explaining that Japanese economy has started picking up not because of an increase in exports, but due to the end of its decrease.

(Collected information)

Thank you, Dudest (nice charts to support your theory) and DollarEuro…

Rebound may be on its way for the USD/JPY, according to David Song on DailyFX, due to various reasons… see his 23rd May post.

I will hold my long USD/JPY order for now.

Happy trading!

For the intraday, the USDJPY is still now reversal in its hourly charts, as prices are now moving at 102.00 and broke all its key resistance level of 101.77, 101.52, 101.23 might continue threading this range since its bearish pattern is still unconfirmed by its moving averages. This weak bearish signal cannot be confirmed by the presence of the 5-day EMA, 9-day SMA and 21-day SMA since the moving averages are not showing any bearish pattern at the moment indicating that drop in its traction is unconfirmed and might show volatility for the coming session. Moreover, the RSI (14) and MACD (9, 12, 26) are indicating that prices are now near the median level and might continue its bearish drop for the coming hours. However, its candlestick sentiment suggests that it’s still showing bearish pattern, but since the moving averages are not showing any bearish pattern at the moment caution should be applied.

Thank you, Mumuy. The way I see it, USD/JPY
retraced at least 100pips of its drop, and the
bounce off the uptrend from April (part of a
much longer uptrend) is the second one -
the last fully-formed candle on the day chart
is a bullish one, bouncing off the support trendline.
Indeed, a third test of the line is needed to confirm
it, but, for now, it holds (and the MVAs are
unperturbedly bullish). . .

I agree. It’s either the fact that USD/JPY found orders to go short from there or the pair met a bunch of SL that triggered the fall.

A Bank of Japan official spoke and spooked the markets again. He stated that the Japanese economy could handle a rate hike.

The answer is simple. The USD is weak.

Yes, wizard56, the simpler answer is always the best!

However, there are a number of items scheduled for next week that

may certainly influence this (and other USD pairs):

  1. ECB rate decision;
  2. BoE rate decision;
  3. Non-Farm Payrolls/Unemployment figures…

Although the QE3 programme reduction will not be
voted in, as yet, if US unemployment should get
closer to the magical 6.5% figure then there would
be more than speculative dollar strength, as one of the
essential conditions for QE tapering would indeed be
met…
As for correction in the US highs, it is indeed an overbought
currency, but there could yet be new highs set: the next three
months are definitely decisive in this respect.
Happy trading.