The USD/JPY pair experienced some volatility recently, with the low touching 151.93 before bouncing back. Although it did not reach the 200-day moving average at 151.58, sellers still have control as the price dropped by 4.5% in July.
While the pair may seem calmer at the moment, it is important to note that price action remains susceptible to sudden swings, especially with the US PCE price index looming. The S&P 500 futures are showing a slight increase, but the index itself is down nearly 2% for the week, indicating that the bounce may not be significant.
Looking ahead, all eyes are on the BOJ policy meeting next week, where sellers could potentially drive the price towards the 200-day moving average. However, once the BOJ meeting is out of the way, dip buyers may become more active, leading to a shift in momentum.
Despite the possibility of a rate hike surprise from the BOJ, there is a likelihood of a “sell the fact” trade in the yen once the initial reaction settles. This is something to watch out for in the coming days as it could impact the USD/JPY pair significantly. In conclusion, while the pair may be experiencing some stability now, the underlying volatility and market sentiment could quickly change the landscape.