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USD/JPY struggles and downside back in the picture

FXStreet (Guatemala) - USD/JPY is trading at 117.66, down -0.06% on the day, having posted a daily high at 117.77 and low at 117.56.

USD/JPY continues to edge lower as US stocks once again perform and lower energy prices continue to lurk. However, USD/JPY at these levels has been talked about for many days now as being counterproductive for the local economy and domestic households with higher import prices.

We are now in holiday season in the US with Thanksgiving and there is little liquidity, which could mean two things short term – either a dead tone to the market or violent swings in the case of positioning and the Yen can be a big pip mover in such a scenario.

There are many risks ahead with the elections in Japan in three weeks time and potential for political jawboning ahead, which could impact price at these sensitive levels. Buying on dips has been the theme of late but this might begin to tail off as risk / reward ratios start to decrease with risks to the downside ahead on the run up to the elections.

Economists regard this as pro Yen and the downside to 117.35/40 could be a key area to watch currently. However, an outright win for Abe would be a booster to the Japanese stock market of course and may be the catalyst for a higher USD/JPY on a continuation of quantitative easing - first target 120.00 for the bulls.

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