The USD/JPY binary options forex pair is consolidating before the next leg higher
A consolidation after a swift rally provides opportunities to buy calls on a daily basis for aggressive players and wait for drops to the 99.20-30 area to buy calls on an hourly basis. Data releases out of Japan might support our view.
The pair has had subdued volatility for the past couple of days and has traded between 99.20 and 99.80. Following the sharp rise from levels around 97.70 last week we are positive on the US dollar outlook against the Japanese Yen.
Today the pair started in Asia around 99.60 and was slowly drifting lower all day long until it tested the lower band after risk sentiment sent European indices lower by more than 1.5%. By the close the indices have rebounded to around opening levels and the move lower in the USD/JPY pair has halted.
Subsequently a couple of hours into the US open, stocks have rebounded in a very strong fashion and the USD/JPY has rebounded to current levels around 99.36. We see this as a buying opportunity for daily calls for tomorrow, the 14th of November.
Any drop towards levels between 99.20 and 99.30 would be taken by us as a signal to buy hourly calls in more active trading hours, such as tomorrow's European morning. We prefer to wait out the Japanese GDP numbers tonight at 23:50 GMT.
Caution should be exercised if we see bad GDP numbers out of France or Germany tomorrow morning at 06:30 or 07:00. Bad numbers can result in a sell-off of equities and the USD/JPY binary options forex pair might be dragged lower from profit taking on the EUR/JPY cross. We will keep you posted on this.