USD/JPY buying opportunities

There has been some activity in Japan today, with widely-anticipated GDP data which was expected to show Japan has pulled its way out of a recession. 

USD
Source: Bloomberg

The quarterly GDP reading came in at 0.6% (versus 0.9% expected). However, year-on-year GDP was actually ahead of estimates coming in at 2.3%.

USD/JPY remains quite choppy and I suspect there will be some volatility this week with the BoJ meeting concluding on Wednesday. Out of the US we have monetary policy meeting minutes and various housing market indicators to look out for. The minutes are likely to reinforce that the Fed remains on track for lift off around the middle of the year. This would see the greenback continue to be bid, while the BoJ is likely to reinforce the need for a weaker yen.

With this in mind I feel buying the dips in USD/JPY I could be the preferred strategy this week. There is an uptrend support line that has been in place since October last year starting from when USD/JPY was trading at around ¥105.00. This support comes in at ¥118.20 and I feel this is the level to buy the pair. I will be looking for potential stops below ¥117.00 around the ¥116.50 mark. Initial targets would be for a move back up above ¥120.00.

USD/JPY

USD/JPY
Source: IG Charts

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