The USD/JPY pair had a very poor showing on Monday, much weaker than I would've expected to be honest. We have plow right through quite a bit of support, but as you can see by the chart there is a ton of a going all the way down to roughly 91.50 in the short term, and most certainly there will be a lot of support at the 90 handle as well.
The Bank of Japan certainly will be watching the situation, as they have already at iterated that they believe fair value is somewhere between 95 and 100. That being the case, there were poor economic numbers out of China which of course had money running for a "safe haven", which in Asia normally means Japan. With that being the case, the Yen continue to appreciate during the session and into the North American trading day. It should be mentioned though, that the Europeans were away from their desks during the session for their extended Easter holiday.
Going forward, I still view this is a "buy on the dips" type of pair. I simply see this market going higher over the long term, and these are simply sales on the US dollar at this point. The Bank of Japan will certainly have something to say about this before it's all said and done, which could happen much quicker than most people realize.
Thursday morning
The Bank of Japan has a monetary policy meeting Thursday morning, and this could rattle the markets. Right now, the markets are expecting quite a bit of quantitative easing out of Tokyo, and if the markets are disappointed, we could see a significant selloff in this pair. However, that more than likely will be a buying opportunity as the Bank of Japan has the ultimate "put" in this market.
The next couple of days should be crucial, but the first supportive candle that I see between now and the end of the week, I am certainly not afraid to start buying. It should also be noted that the nonfarm payroll number comes out on Friday, which this pair is particularly sensitive to. A good number will more than likely send this pair much higher.
