By Fast Brokers – The USD/JPY is ducking back below its psychological 94 level as the risk trade experiences a setback across the board. The concept of a hung parliament in the UK and renewed uncertainty in Greece has dented the risk trade’s recent rally. Greece’s bond prices are dropping again after government officials expressed their disapproval of IMF involvement with any future financial aid packages due to the apparent severity of their proposed austerity measures. The EUR/USD and Cable have taken a sizable hit today and investors are buying the Yen again in reaction to today’s developments. Meanwhile, a little weakness in the USD/JPY can also be viewed as a healthy occurrence considering the extent of the currency pair’s recent rally from March lows. The USD/JPY is still trading well above any meaningful downtrend lines, meaning the currency pair’s new uptrend is intact for the time being. However, the BoJ will make a monetary policy decision tomorrow, and policy meetings normally have the potential to deliver a sizable impact to corresponding currency pairs. Since the USD/JPY has made such an impressive comeback and is trading well above its highly psychological 90 area, the BoJ may feel comfortable expressing more confidence in Japan’s economic condition. That being said, it seems unlikely the central bank will increase liquidity again. Either way, it will be interesting to see whether tomorrow’s monetary policy statement yields more profit taking in the USD/JPY. On the other hand, such the BoJ happen to remain very dovish this could benefit the currency pair due to recent waves of positive U.S. economic data. Speaking of the U.S., the FOMC will release its meeting minutes today and investors will be looking to see if the central bank’s outlook has brightened.
Technically speaking, the USD/JPY faces technical barriers in the form of previous April highs and the currency pair’s psychological 95 level. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 4/2, 4/1, and 3/30 lows. Additionally, the psychological 93 level could serve as a psychological cushion should it be tested.
Present Price: 93.83
Resistances: 94.06, 94.26, 94.40, 94.56, 94.74, 94.89
Supports: 93.80, 93.67, 93.57, 93.30, 93.09, 92.86
Psychological: .95, .94, .93, 2010 highs
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