By Fast Brokers
The USD/JPY continues to struggle, heading beneath our 1st tier downtrend line. The currency pair briefly traded below the psychological 95.00 level today, but bulls quickly came to the rescue. However, the fact that the USD/JPY dipped below our 1st tier uptrend line is a negative sign for the near-term. At least we haven’t seen a high volume selloff and volume seems to be on the decline. Therefore, we could see a temporary bottom soon, likely above March 19 lows. On the other hand, we could see an accelerated movement to the downside if March 19 lows don’t hold. Fortunately for optimists, these lows are still fairly out of reach, leaving the possibility of a near-term turnaround in the mix. Hence, the next few trading sessions could prove to be critical to the USD/JPY’s uptrend.
The USD/JPY has been trending lower the last week as analysts caution of overbought conditions in U.S. equity markets. The currency pair seems to be under more downward pressure than the S&P futures, possibly indicating an oncoming selloff in U.S. equities. On the other hand, with the Carry Trade mute, investors could be hinting at a recovery in the U.S. economy with the Japanese economy lagging behind. Either way, the momentum remains to the downside in the USD/JPY for the near-term, and we’ll have to see a reversal to the upside on sizable volume for the currency pair to change course. That being said, the medium-term outlook is still bullish unless the aforementioned supports collapse.
The resilience of the USD/JPY’s uptrend will likely be determined by U.S. equities. Are we witnessing profit taking in equities, or are U.S. markets in for a second round of pain? The currency pair is getting close to testing its limits and it will be interesting to see how the USD/JPY holds up over the next few trading sessions.
Fundamentally, we find supports of 95.04, 94.83, 94.50, 94.14, and 93.89. To the topside we see resistances of 95.40, 95.69, 96.05, 96.37, and 96.66. The USD/JPY is currently exchanging at 95.30.
Market Commentary provided by Fast Brokers.
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