Unlike the USD index, the Yen index is delicately poised below a key area of price resistance in the 7780 region, which has now been tested on several occasions over the last few days. On each occasion the index has pulled back, and indeed in early May it marked the level for a further sell off in the Yen, which saw the index test the 7354 floor of support which is now below (as marked by the dotted yellow line).
This phase of price action is clearly delineated by our volume at price histogram which shows the areas of volume congestion, and the key level is that at 7800. If this is breached then we can expect to see further Yen strength across all pairs, with a possible move towards 8000, and even towards a test of the resistance at the 8100 region. However, should we see a further failure at the current resistance point, Yen weakness should resume, and we may even see a further test of the support at the 7350 region, in the longer term. This would send the usd/jpy soaring higher.
By Anna Coulling