By Fast Brokers – The USD/JPY continues its gradual ascent as it gives what it can to the broad appreciation of the Dollar taking place. Meanwhile, our 2nd tier uptrend line and 1st tier downtrend line are reaching an inflection point today. However, we feel the inflection point with our 2nd tier downtrend line will have a more prominent impact on the currency pair since the USD/JPY continues to bounce between these trend lines. Volume is increasing to the upside on the 4-hour, meaning we could have a retest of our 2nd tier downtrend line shortly. As with the rest of the major Dollar pairs, investors are reacting to both a slower improvement in U.S. economic data and aggressive language from Bernanke concerning the Fed pulling in the reins on monetary policy. Therefore, the U.S. may attempt to put a cap on debt creation and let the cards fall where they may, giving near-term strength the Dollar. Japan released some data late Wednesday showing capital spending declined less than anticipated, though the reading was still much lower than March’s. The better than expected capital spending number may be limiting gains in the USD/JPY today. Regardless, we still haven’t seen a substantial breakout in the USD/JPY to the upside, giving us little reason to change our bear trend outlook. On the other hand, the currency pair hasn’t collapsed either, giving the uptrend a glimmer of hope.
Fundamentally, we maintain resistances of 96.33, 96.90, 97.45, 97.98, and 98.66. To the downside, we find supports of 95.82, 95.12, 94.43, 93.77, and 93.11. The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion. The USD/JPY is currently exchanging at 96.40.
Market Commentary provided by Fast Brokers.
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