By Fast Brokers – We cautioned that the USD/JPY can come alive at any moment, and boy did it every. As U.S. equities dove to record intraday losses amid pandemonium on Wall Street investors rushed for the yen, dollar, and gold for safety. The USD/JPY collapsed from about 94 to 88, roughly a 5% loss, before staging an impressive recovery back above the psychological 90 level. Least to say it has been a historically wild 24 hours. Part of the USD/JPY’s recovery today has been fueled by the BoJ’s decision to inject $22 billion worth of liquidity into the system in reaction to the Yen’s extreme strength across the board. However, this measure may prove futile should the risk trade get pummeled once again. The yen reaffirmed its status as a safe haven in the wake of investor panics, and we’d expect more of the same if equities tumbled again. That being said, investors should keep an active eye on the news wires across the globe as governments work to counter uncertainty and bring stability to the financial markets. Any renewed panic in the EU could prove devastating for the EU, though it wouldn’t be surprising to see the risk trade head into the weekend on an upbeat note as finance ministers pull out their fire extinguishers. However, China will kick off the trading week with key economic data. Any sign of a slowdown in China could spark risk aversion, whereas encouraging figures could help buoy the USD/JPY.
Technically speaking, the USD/JPY faces technical barriers in the form intraday highs and the psychological .92 and .93 areas. As for the downside, the USD/JPY has technical cushions in the form of the psychological .91 and .90 areas.
Present Price: 91.62
Resistances: 91.70, 91.80, 91.98, 92.14, 92.32., 92.56, 92.77
Supports: 91.53, 91.31, 91.10, 90.95, 90.77, 90.53
Psychological: .93, .92, .91, .90
(click chart to enlarge)
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