USD/JPY has today broken to the downside. A push under 79.157 is now sought to initiate a fresh impulsive move to the downside. We continue to expect a slow grind lower, given that our downside target (a revisit of the all-time low) is not too distant.
Furthermore, we note the speedy deterioration of the Japanese current account surplus. The failure to rise on the back of this news is another indication that a short bias is warranted.
This view is further supported by our bullish bias in the US Dollar index. In a strengthening US Dollar environment it would be expected that the Yen will continue to act as a safe haven. A re-test of 79.16 is anticipated over coming sessions. However, we note that there is probably limited downside below 75.35, so if the move lower does continue it is likely to be slow and grinding in nature.
A re-test of the 200 day moving average, close to 79.007 is anticipated over coming sessions. A break back over 80.636 is required to alter our bearish bias.