A second retest and resistance at 108.2 can confirm the continued downtrend of the pair, but bearing in mind the announcements at the end of the week, stay clear of this pair for the swing and protect intraday profits should you consider shorting.
Yen gains are not favourable for stocks traders and as many would have figured a weaker Yen correlates to a more than positive outlook for the Nikkei. Declines in Japan’s currency will be a boon for company earnings and help consumer sentiment, while the Japanese Government will likely turn off short sellers for Japanese stocks as the likelihood of stimulus before Japanese stocks bottom out are likely.The BOJ says it’s ready to add stimulus if the economy falters, while on Oct. 20, a Nikkei newspaper report the country’s $1.2 trillion pension fund would buy local shares roused the TOPIX from a three-week rout.
108.2 remains a barrier for the pair for the start of the week as the support price of 2nd October may be revisited as a potential resistance, with 107 the level to break for more bearish action to follow. That is, before the Thursday-Friday combo of the FOMC Meeting Minutes, followed by Yellen’s speech and the BOJ monetary policy statement and press conference.