USD/JPY may be consolidating rather than reversing - Scotiabank

Strategists at Scotiabank say they think the USD may be consolidating, rather than reversing at this point but the near-term risk may be tipping a little lower towards the mid 103 area where they expect support to be firmer and the USD to pick up again.

Key Quotes

“Given the weakness in the USD overall and the drop in stocks around the globe, the JPY should perhaps be doing better than it is today. The fact that it isn't and is holding in the low 104 area suggests that the USD’s recent gains may have some sticking power.” 

“There were no major data reports from Japan overnight and markets are starting to focus on month end which may temper USD gains somewhat. The BoJ meets November 1 (no policy change expected).”

“USDJPY short-term technicals: neutral/bullish—USDJPY gains stalled in the upper 104s yesterday and short-term price signals look potentially negative (daily “gravestone” doji candle). We think the USD may be consolidating, rather than reversing at this point but the near-term risk may be tipping a little lower towards the mid 103 area where we expect support to be firmer and the USD to pick up again. Daily “cloud” chart signals remain bullish.”