By Fast Brokers – The USD/JPY is locked between trend lines as the currency pair consolidates between 91-92 with investors taking a breather and digesting the events of last week. Naoto Kan is taking over as finance minister today, allowing the USD/JPY to settle after intense volatility following Hatoymama’s resignation. Kan’s reign could be brief considering upper house elections take place next month. Meanwhile, Kan will try to reassure investors and creditors that Japan can be more conservative fiscally in order to avoid another downgrade of its debt. However, investors remain focused on the EU as finance ministers meet to discuss recent developments in Spain and Hungary. If the EUR/USD is unable to hold 1.20 and the currency pair’s downturn continues then the USD/JPY could be dragged lower since the yen is still a safe haven asset during moments of heightened uncertainty. On the other hand, in the past Kan expressed his preference for a weaker yen and this could keep the USD/JPY propped up until investors see how he behaves as prime minister. Regardless, the BoJ was able to ignore Hatoyma’s plea for a weaker yen and it’s hard to imagine why the central bank’s policy would shift just because Kan moved up from FM to PM. Meanwhile, the data wire will be light around the globe over the next 48 hours, meaning psychological forces are still in the driver’s seat. Hence, keep an eye on those news wires for any pertinent events.
Technically speaking, the USD/JPY faces multiple downtrend lines along with 6/7 and 6/4 highs. As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with 6/7 and 6/1 lows. Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.
Present Price: 91.62
Resistances: 91.70, 91.80, 91.97., 92.11, 92.25, 92.39, 92.58
Supports: 91.53, 91.38, 91.29, 91.13, 91, 90.86, 90.74, 90.62
Psychological: .90, .92, June highs and lows
(click chart to enlarge)
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