USD/JPY failures despite Brexit enthusiasm are a red flag

20 June 2016, 20:00
Sherif Hasan
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USD/JPY flat despite risk rally

The conditions are nearly perfect for a rally in USD/JPY but the pair is stubbornly soft. A rally to 104.85 earlier has been beaten back and the pair is at a session low of 104.24, virtually erasing a gap higher at the open.

Looking at the chart, the inability to hold any kind of bounce despite the drop last week on the BOJ is a major red flag. Add in the positive risk sentiment and recovering US yields and there's a strong case for shorts here but it's tough to pull the trigger given the Brexit liquidity and dangers.

Fundamentally, this report may have helped to cause a breakdown in the pair to session lows at 103.92 shortly after I wrote this post.

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