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USD/JPY - An attempt at plotting future moves

FX:USDJPY   U.S. Dollar/Japanese Yen
USD/JPY             crashed to a low of 98.82 levels in Asia, but recovered part of the lost ground and now trades around 102.35 levels. On the daily chart , the falling channel remains intact unless the NY closing is not below 101.02 levels.

Brexit is done, but still there is plenty of political uncertainty in the pipeline. A major one is the US election. Markets fear Trump and if polls start showing Trump in lead, we could see risk aversion severe than the one we saw today. In such a case, the pair could find itself around 92.00 levels (channel support by October).

Also note, the UK political uncertainty is not out of the way. Hence, the odds of the pair moving well above 105.55 levels appear dim.

If indeed, there are no more referendums across Europe and there is no political turmoil in the UK, we could see the pair move above 105.55 levels, however, a move further towards 110.00 (by October or so) would require positive news flow surrounding US elections - which means Clinton lead.

I have not considered BOJ easing here. There are two reasons for that - one being, the BOJ is stuck and out of ammo and second one being, BOJ's tools have lost their efficiency. Moreover, it is not about whether BOJ can ease, but the question is whether more easing will be well received by the markets.

At the most, direct intervention could be seen, however, history shows that alone cannot change the broader trend in the currency.

BOJ intervention

As of now, BOJ intervention could be seen below 100.00 levels. However, as time goes by and if pair stays between 100-105, BOJ would become more comfortable with the pair around 100 and thus intervention then could be see at much lower levels than 100.00
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