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USDJPY – Surviving the Double Bottom
USDJPY came close but held the double bottom low of 107.31 in New York trade today. As we noted earlier, the pair was driven lower by a combination of stop running, risk aversion flows and some market uncertainty about Governor Kuroda’s reappointment.
Earlier in the day, Japanese PM Abe stated that he has yet to decide on the reappointment of Mr, Kuroda and that lack of confidence along with a turn in the Nikkei could have contributed to the fall in USDJPY that dragged the pair to fresh six month lows.
Mr, Kuroda is the principal architect of Japan’s reflation policy and is widely respected by market participants. The market is pricing in an 80%-90% chance of a Kuroda reappointment so any hesitation or change of heart by Mr. Abe is sure to cause further turmoil in USDJPY.
For now, the selling flows appear to have ceased and if the pair can climb above the 108.50 level it will likely have put in a solid double bottom at that level. However, a break of 107.00 shows no support until 105.50 so a slide below those key levels could precipitate an avalanche of selling that could quickly push the pair to fresh yearly lows.