By Fast Brokers – The USD/JPY is continuing Monday’s selloff as investors opt for risk aversion following disconcerting comments from both Bernanke and Moody’s. Yesterday Bernanke stated that the U.S. economy still faces considerable headwinds. It seems Bernanke is attempting to dampen investor optimism stemming from Friday’s enouraging U.S. employment data. In addition to Bernanke’s caution statement, Moody’s warned that the U.S. and UK may be testing the patience of their respective Aaa ratings. The fear of U.S. and UK debt exposure has increased investor uncertainty, thereby resulting in risk averse money flows. Hence, the USD/JPY is being hit by a combination of negative psychological developments from the West.
Meanwhile, the DPJ announced the implementation of a $81 billion stimulus package to help buoy a beleagured Japanese economy. Although the DPJ’s new stimulus package should give a positive boost to the nation’s economy, analysts are already debating whether the $81 billion is enough to turn deflationary pressures. The Yen initially strengthened in reaction the DPJ’s announcement, highlighting investor skepticism in regards to the effectiveness of the stimulus package in regards to tempering deflation. In addition to the DPJ’s announcement, Japan reported that its Trade Balance widened more than expected, suggesting global demand for Japanese exports continues to recover.
Technically speaking, the USD/JPY is trading back below its highly psychological 90 level in addition to multiple downtrend lines hanging overhead. Therefore, the currency pair still has its fair share of topside techncials to deal with before cementing a more formidable uptrend. As for the downside, the USD/JPY does have a couple new uptrend lines hanging nearby alonng 12/04 and 12/03 lows. Hence, while the USD/JPY does face strong downside pressures, the currency pair has at least gained a little breathing room from October lows and the psychological 85 level.
Meanwhile, investors are awaiting tonight’s Final GDP figure. If Final GDP prints positive as a result of an increase in export demand, then the USD/JPY may face further downward pressure as inverstors favor the Yen over the Dollar as a safe haven.
Present Price: 88.38
Resistances: 88.62, 88.86, 89.03, 89.12, 89.34, 89.54
Supports: 88.34, 88.18, 88.01, 87.82, 87.72, 87.49
Psychological: 90, November Highs and Lows
Market Commentary provided by Fast Brokers.
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