By Fast Brokers – The USD/JPY popped higher amid a broad-based Dollar rally in reaction to the Fed’s surprise decision to raise the rate at the discount window by 25 basis points. The Fed’s announcement signals that the emergency window may be shutting. Though a small movement, investors are taking it as the first step in the process of soaking up loose liquidity. Such mentality has led investors to buy up the USD/JPY since the BoJ remains concerned about deflationary pressures in Japan. Hence, it is becoming apparent that the Fed may tighten before the BoJ, making the Dollar a solid buy over the Yen. However, although U.S. manufacturing is picking up, unemployment is still a big problem and today’s data shows that this week’s rise in PPI didn’t translate into higher consumer prices. Hence, the Fed is likely to bring along its exit strategy slowly, tempering excitement in the USD/JPY. Japan will kick off next week with the release of the BoJ’s monetary policy minutes. Investors will be digging into the central bank’s outlook on Japan’s economy and inflation. However, the ball will likely remain in America’s court with consumer confidence data due Monday while investors remain concerned about debt issues in the EU.
Technically speaking, the USD/JPY has multiple downtrend lines serving as technical barriers along with intraday highs. Our 3rd tier downtrend line serves as a key barrier since it runs through January highs. Hence, an eclipse of our 3rd tier could signal a continuation in the rally towards the 93 area. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday lows. Furthermore, the highly psychological 90 level becomes a technical cushion should it be retested.
Present Price: 91.76
Resistances: 91.81, 91.89, 92.03, 92.15, 91.25, 92.35
Supports: 91.66, 91.54, 91.41, 91.31, 91.22, 91.12
Psychological: 90, February highs
Market Commentary provided by Fast Brokers.
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