By Fast Brokers – The Hatoyama resignation rally carried on during the U.S. trading session as political uncertainty weighed on the yen across the board. The yen may continue to exert a relative weakness over the near-term, or at least until the government decides upon a successor. Considering July elections are around the corner, investor uncertainty may surround the USD/JPY for another month. Meanwhile, it’s important that the government put the finishing touches on plans to reduce Japan’s debt load. Ratings agencies are watching closely and if the government fails to follow through on its promises then Japan’s debt could be in line for another downgrade. However, before we get ahead of ourselves, attention should focus back on the U.S. with key employment and PMI data on deck. Also, conditions in the EU haven’t really changed, meaning investors should continue to pay close attention to the EU news wire for any new developments. If uncertainty in the EU does peak again then the USD/JPY could drag since its unlikely that the yen has completely lost its safe haven status at this point in time. Regardless, recent gains in the USD/JPY are encouraging and it will be interesting to see whether the currency pair can challenge May highs.
Technically speaking, the USD/JPY still faces multiple downtrend lines along with intraday, 5/18 and 5/13 highs and psychological 92 level. As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with 6/1 and 5/26 lows. Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.
Present Price: 92.21
Resistances: 92.25, 92.35., 92.58, 92.76, 92.92, 93.08
Supports: 92.11, 91.97, 91.80, 91.65, 91.53, 91.38, 91.13
Psychological: .90, .92, May highs and lows
(click chart to enlarge)
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