FXstreet.com (London) - Implied volatilities on JPY were again yesterday and the market continued to bet on further volatility for Yen, in particular against the USD. When trading options, the implied volatility is the volatility suggested by the price of the option based on market standard pricing models such as Black-Scholes.
Yesterday we reported several market players taking large straddle positions, effectively betting on a USD/JPY breakout to either the upside or the downside.
Yen should be tempered at least for the time-being with new stimulus likely to boost economic recovery and market sentiment.
Yen has traded extremely rangebound after early price action in the Asian session. Yen continued to strengthen in early trading USD/JPY shaving 54 points to 88.82, before pulling back to trade the remainder of the session tightly rangebound around 88.94-89.08, currently trading at 88.96.
James Chen, of FX Solutions, highlights that strong support can be expected at 88.00 and 87.00 in the event of a non-heeding. This informative technical report explains the rationale.