The Dollar has bounced at 88.60 low on Friday to reach levels right below 90.00, and the pair remains trading in a range from 89.70 to 89.95 during Monday's European session however, Nicole Elliott, senior technical analyst expects the USD/JPY to continue depreciating through the fourth quarter of the year.
One-month at-the-money implied volatility is expected to increase considerably over the next months, according to Elliott, as the Dollar might drop below 88.25: "One-month at-the-money implied volatility has traded around 14.00% for a total of six months; nevertheless we feel this should increase towards 20% in Q4. The reason for this is because we expect JPY to drop below September’s low at 88.23 causing serious and repeated downside testing (and potential verbal intervention and maybe more) of key support lying between this year’s low at 87.10 and 85.00."
All in all, Elliott expects general weakness on the Dollar, which could reach as low as 79.75 All time low of April 1995: "We still favour generalised US dollar weakness, the Yen one of the best performers. A sudden slide to the all-time low at 79.75 of April 1995 should not be ruled out."
USD/JPY (Oct 05 at 13:46 GMT)
H 89.98 L 89.45
| S3 | S2 | S1 | R1 | R2 | R3 |
| 89.2416 | 89.4658 | 89.6900 | 89.8100 | 90.0345 | 90.2590 |
| [?]Trend Index | [?]OB/OS Index |
| Slightly Bearish | Neutral |
| Data updated on Oct 05 at 13:40 (15-minute timeframe) |
[ View USD/JPY Technical Studies ]
