Having made the break through the 100-yen level in the last quarter of 2013, many thought this would be the start of a larger move higher as the Japanese government continued to employ policies that weakened the yen against the US dollar. Also in that year we saw the currency markets get to grips with the Japanese government’s introduction of Abenomics and the weakening effect that it had on the yen. Twelve months later the effect of this new policy has begun to wear off, and the USD/JPY has struggled to maintain its momentum. Over the course of February, the price has continued to oscillate around the ¥102 level, and is moving above/below the 100-day moving average on an almost daily basis.
The worse-than-expected HSBC Chinese manufacturing PMI figures have seen the yen strengthen more than at any other time in the last two weeks; however, it has failed to conclusively give a medium-term sense of direction above and beyond the current sideways trajectory. The longer this move continues sideways, the more likely we are to see an aggressive breakout either higher or lower. It is possible that external influences will ultimately decide where that is, and a prudent management of risk would appear to be the best policy for traders.