By Fast Brokers – The USD/JPY has popped past our 4th tier downtrend line as the currency pair continues to log encouraging gains above the psychological 90 level. Investors snapped up the Yen after BoJ Shirakawa stated the central bank will keep its benchmark rate near zero until there is a considerable recovery in prices. The DPJ has stressed its disapproval of deflation, and it seems the BoJ is falling in line with the Finance Ministry’s desires. The concept of a very dovish monetary stance from the BoJ combined with an improving outlook for U.S. economic performance has led investors to favor the Dollar over the Yen. However, the USD/JPY is trading off of intraday highs right now after U.S. Final GDP printed 6 basis points below analyst expectations. Should today’s U.S. Existing Homes Sales data also disappoint, investors may be encouraged to lock in profits on the USD/JPY as investor confidence in the U.S. confidence takes a step back. On the other hand, impressive housing data may allow the USD/JPY to piece together further intraday gains. The U.S. will release more housing data tomorrow in the form of New Home Sales along with the release of Britain’s Monetary Policy Minutes. Hence, we may witness further volatility in the FX markets due to the combination of key econ data releases and lower volume as investors take off for Christmas vacation.
Technically speaking, the USD/JPY’s movement above our 4th tier downtrend line is an encouraging development since it runs through 8/13 levels, or the psychological 95 area. Meanwhile, the USD/JPY does face topside technical barriers in the form of our 5th tier downtrend line, 10/30 highs, and 10/26 highs. Furthermore, the psychological 90 area could still play a role considering how tough the trading zone has been to overcome in the past. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 12/21, 12/18, and 12/14 lows. Meanwhile, the psychological 90 level should serve as a technical cushion.
Present Price: 91.53
Resistances: 91.59, 91.71, 91.94, 92.04, 92.17, 92.35
Supports: 91.22, 91.05, 90.94, 90.76, 90.58, 90.36
Psychological: 90, December Highs
Market Commentary provided by Fast Brokers.
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