It’s been a subdued start to the week for USD/JPY, which has picked up where it left off with things last Friday to continues to range between the 108.60s and 109.00 level. A lack of fresh fundamental catalysts to note over the weekend (US/China talks appear to have come to nothing as expected) mean that uninspired price action is not really very surprising. Moreover, FX markets await a number of key fundamental catalysts later in the week.
Amid the subdued trading conditions, it appears as though USD/JPY has consolidated within a descending triangle pattern. Typically, these break to the downside. The hypotenuse of the triangle is a downtrend linking the ever-lower highs since 18 March. The bottom of the triangle is Monday and the end of last week’s lows around the 108.60 mark. A break below this area would open the door to a move towards support in the form of the 9, 10 and 11 March lows around 108.40. Alternatively, a break above the hypotenuse would open the door to a run at recent highs back above 109.00 and in the 109.30 area.