By Fast Brokers
The USD/JPY is filling out the right shoulder of the head and shoulders pattern we pointed out on Monday. The light volume has disabled the currency pair from climbing past our 3rd tier downtrend line. However, our 2nd tier uptrend line is still in place, and should remain so until we see a pickup in activity in U.S. equities with important economic data and stress test Thursday on the way. Therefore, the USD/JPY is waiting for the S&P to make its first move. If U.S. markets react positively to the next 48 hours of news and the S&P can distance itself from 900, we could see the USD/JPY exercise its positive correlation and re-approach 100 on heavy volume. To the downside, our 97.11 support and April lows serve as key supports. If these cushions don’t hold, then we could witness the pullback accelerate. In all, investors should keep a close eye on U.S. equities to see if they can follow through on their rally. We maintain our bullish stance trend wise on the USD/JPY unless the aforementioned cushions give way.
Fundamentally, we find resistances of 98.76, 99.20, 99.79, 100.56, and 101.43. To the downside, we see supports of 97.98, 97.32, 96.33, 95.58, and 94.97. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 98.26.
Market Commentary provided by Fast Brokers.
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