Japanese Yen Performance

The Japanese Yen has been strong compared to other major currencies, especially the Swiss Franc. A heat map shows how currencies have changed against each other, with the base currency on the left and the quote currency at the top. The Yen’s performance against the US Dollar is highlighted, reflecting recent market trends. Right now, the USD/JPY is trading in a narrow range around 150.60, as the market waits for clear signals. The ongoing US government shutdown and the Fed’s pre-meeting blackout are keeping volatility low. This calm period allows traders to prepare for the next big move. For those who think the Yen will rise, the 151.20 level is key for a bullish breakout. A solid strategy could be to purchase call options or set up bull call spreads with a strike price above 151.20, aiming for the 152.00 area. This view is backed by the latest US CPI reading of 3.9% before the shutdown, which suggests the Fed may not adopt a more dovish stance. On the other hand, if the price falls below the psychological 150.00 level, it could mean that sellers are gaining control, leading to a deeper pullback. In this case, buying put options could help protect against a drop towards 148.57, especially since there’s a significant chance of intervention from Japanese authorities. Similar actions were taken in late 2022 when the pair last consistently traded above 150.

Current Market Condition

The current price action is range-bound, likely lowering short-term implied volatility, making options cheaper. This scenario offers a chance to prepare for a larger move once the government shutdown ends and economic data resumes. Historically, extended shutdowns, like those from 2018 to 2019, often lead to increased market volatility as uncertainty builds. While we’re focused on technical levels, we also need to pay attention to mixed signals from other markets. Persistently low oil prices under $57 a barrel indicate weak global demand, which could challenge the current risk-on sentiment. This divergence underscores the necessity for cautious positioning, as the overall economic picture remains unclear due to a lack of new US data. Create your live VT Markets account and start trading now.

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