By Fast Brokers – The USD/JPY has popped back above its psychological 93 level and is looking up at 5/5 levels as the currency pair climbs back to respectability amid a broad-based risk rally in reaction to the EU’s $1trillion bailout package. Additionally, it is likely that the BoJ’s $22 billion injection of liquidity is weighing on the yen and propping up the USD/JPY. The EUR/USD, Cable, and Aussie have all made noteworthy recovery from Thursday’s lows, a signal that uncertainty is easing a bit, a positive for the USD/JPY. Furthermore, we should note the improvement in the U.S. labor market and the influence this could have on the Fed to tighten its stance a bit regardless of weakness in the EU. This gives a relative strength to the dollar and should benefit the USD/JPY so long as there isn’t another wave of uncertainty. Tomorrow’s Asia trading session will be all about China with CPI, industrial production, etc. on deck. Bulls will be looking for encouraging data from China in order to keep the USD/JPY. However, a cool down in China could deflate today’s positive momentum in the risk trade.
Technically speaking, the USD/JPY faces technical barriers in the form of multiple downtrend lines along with intraday, 5/6, and 5/5 highs. Additionally, the psychological 95 area could serve as a solid barrier should it be tested. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday and 5/7 lows. Furthermore, the psychological 93 and 92 areas could serve as solid supports over the near-term.
Present Price: 93.12
Resistances: 93.29, 93.43, 93.54, 93.64, 93.76., 93.95, 94.15
Supports: 93.06, 92.75, 92.56, 92.32, 92.14, 91.98, 91.80
Psychological: .93, .94, .92, .91, .90
(click chart to enlarge)
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