USD/JPY Stabilizes Around 90

By Fast Brokers – The USD/JPY is stabilizing around its highly psychological 90level following yesterday’s large pullback in the wake of psychological developments.  Today BoJ Deputy Governor, Yamaguchi, supported the BoJ’s defense of its neutral monetary policy despite pressure from the finance minister and prime minister to loosen liquidity in order to combat deflationary pressures.  Yamaguchi implied that the BoJ has little wiggle room liquidity wise, effectively throwing the ball back into the DPJ’s court.  However, the USD/JPY didn’t show too much of a reaction to Yamaguchi’s comments since the BoJ’s stance seems to have been priced in yesterday.  On the other hand, the USD/JPY did weaken a bit after Japan’s Trade Balance yielded a larger surplus than anticipated.  Exports to China and the U.S. printed stronger than expected, giving life to Japan’s struggling manufacturing sector and consequently placing downward pressure on the USD/JPY since a recovering Japanese economy could allow the BoJ to remain neutral.  However, the USD/JPY has held above Tuesday lows thus far and 90 is proving to be a solid defense once again.  Meanwhile, investors are awaiting U.S. New Home Sales accompanied by Bernanke’s Congressional testimony.  Strong U.S. data could help the USD/JPY continue its stabilization since investors may move back into the Dollar should data print positive.  Additionally, statements from Bernanke carry the potential to move markets due to their psychological potency.  It will be interesting to see whether Bernanke addresses the Fed’s 25 basis point hike in the discount rate or gives further details in regards to the exit plan timeline.  Although Japan will be quiet on the data wire tomorrow, the U.S. will release Durable Goods Orders along with the continuation of Bernanke’s testimony.  Strong DGO data could imply an increase in demand for Japanese products.  Hence, the USD/JPY could remain active for the next 24 hours.

Technically speaking, the USD/JPY has multiple downtrend lines serving as technical barriers along with intraday, 2/16, and 2/17 highs.  As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 2/16, and 2/11 lows.  Furthermore, the highly psychological 90 level could continue to serve as a technical cushion for the time being.

Present Price: 90.23

Resistances: 90.25, 90.37, 90.47, 90.57, 90.66, 90.81

Supports: 90.12, 90.03, 89.91, 89.79, 89.67, 89.54

Psychological: 90, February highs and lows

(click to enlarge)

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.