The USD/JPY is heading lower in late London and New York
Looking at the current performance of the USD/JPY pair, we are likely to see a move lower provided that some conditions are met and we enter into a position in this pair this afternoon. The main challenge for the bears would be to overcome a key support line around 119.10 which is already very close.
From what we have seen in recent price action of the USD/JPY pair, there is a big likelihood that a new set of sellers will be emerging very soon to reverse the correction which has been the theme for the past couple of days, as the rumors from Japan about the end of the quantitative easing program there have subsided
Looking at the charts we would love to see a close on the 30 minutes chart below the 119.10 area so we can play our scenario for buying daily puts on the pair in order to validate a successful position at the close of the New York trading session around 21:00 GMT.
What makes us think that the pair might be heading lower is the recent soft patch in U.S. data. Just today we have heard about lower than expected Housing Starts, Building Permits and Mortgage Applications. The U.S. producer price index has also been lower than anticipated as core costs have risen by 1.6%.
The market needs to see more robust numbers from the broad economy in order to justify an even lower Japanese yen. Granted, the Bank of Japan quantitative and qualitative easing program can exert weight, but there are no warranties about the Fed raising interest rates, which has been supportive for the USD/JPY.
The Fed will release minutes from its latest policy meeting around 19:00 GMT later tonight, we will be looking for more price action then and move our forecast to tomorrow with an hourly close above 119.40 leading to buying daily calls, while a close below 119.10 leading to us buying daily puts for tomorrow.