Damage control on the false breakout
USD/JPY broke the December high and then plunged more than 100 pips earlier today in a potentially significant reversal. But the bulls have gotten back on their feet and are battling to close higher for the fifth consecutive day.
A finish above yesterday's high of 121.40 (spot at 121.27) would keep the strong bullish bias intact. Below would point to a healthy period of consolidation before a fresh run toward 122.00.
USDJPY daily
In the bigger picture, it's impossible to bet against the US dollar at the moment. The economy is hot, money is flooding out of Europe and the Fed is getting closer to hiking rates. Unless there is a sustained round of soft US data, I just can't see a reason not to buy US dollar dips.
But would I chase it here? No. Everyone would love to be holding euro shorts and USD/JPY longs from two weeks ago but that train has left the station. Pick a level and scale in there; I like 120.50 in USD/JPY.