The hardest trades to take are generally the most profitable. Long USDYEN has not been an easy trade the past month with everything that could go wrong… did ! The biggest factor has been the drop in US treasury yields. USDYEN is the most sensitive currency pair in the majors to US yields and US 10yr yields dropping to 2.16% lows this week and spitting distance for the lows of the year…very unhelpful. The yield is back to to 2.2% this morning and supporting USDYEN. Yellen tonight the obvious focus for markets and her speech will dictate direction. Market pricing for a Dec rate hike is only 30%. Central Bankers need to finesse markets so their decisions dont bring about wild volatility. Yellen will want a Dec rate hike priced back over 50% and tonight is a perfect opportunity to finesse the market towards this. Expect some hawkish rhetoric for a Dec rate hike in play. Bond yields higher = USDYEN higher.
Technically on 4hr hour chart below USDYEN looks like its setting up a potential triple bottom. The neckline is at 109.85. The chart pattern is approx 150 pts so the initial target topside is towards 111.30. So expect the 111.00 resistance level to be taken out if the chart pattern is triggered above 109.85. Price shouldnt dip below the immediate low of the triple bottom which sits at 108.85..so longs can work stops below here.