By Fast Brokers – The USD/JPY is consolidating with an upward bias despite pops in both the EUR/USD and GBP/USD. Hence, the USD/JPY seems to be trading on its own fundamentals rather than its correlation with the Dollar. That being said, the USD/JPY is likely deriving its strength from last week’s statement from the BoJ implying that the central bank plans on maintaining its loose monetary policy for the foreseeable future, or at least until there is a considerable recovery in prices. Hence, last week’s -1.9% Tokyo Core CPI reading indicates investors likely won’t see tightening from the BoJ for quite some time. Meanwhile, investors are expected the Fed to begin reigning in its alternative liquidity measures next year, giving the Dollar a relative strength over the Yen for the time being. However, mixed U.S. econ data last week is holding back the USD/JPY’s rally as investors lose a bit of confidence in the U.S. recovery and take this as an opportunity to lock-in recent Dollar gains. As a result, the USD/JPY is deadlining until we receive some more U.S. econ data. The U.S. will release some HPI and CBI Consumer Confidence today, which would normally be market movers. However, activity around the FX market is subdued right now since we’re in another holiday-shortened week.
Technically speaking, the USD/JPY is encountering some key downtrend lines. Our 2nd and 3rd tier downtrend lines run through April and August highs, respectively. Hence, should the USD/JPY clear these two downtrend lines, we could see the USD/JPY extend its present uptrend towards the highly psychological 100 level again over the medium-term. Meanwhile, the USD/JPY faces addition topside technical barriers in the form of October and September highs. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 12/24 and 12/21 lows. Furthermore, the highly psychological 90 level could serve as a strong support area should it be tested.
Present Price: 91.78
Resistances: 91.80, 91.94, 92.04, 92.17, 92.35, 92.49
Supports: 91.60, 91.43, 91.25, 91.08, 90.92, 90.76
Psychological: 90, October and September Highs
Market Commentary provided by Fast Brokers.
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