By Fast Brokers – Kan preceded Osborne today by announcing Japan’s own plans for reducing its huge budget deficit. Japan will cap annual spending and plans on balancing the budget within 10 years while reducing bond issuance. Hence, fiscal austerity is now stretching to the East and the Yen strengthened on the news. However, the initial reaction from ratings agencies has been far from encouraging since Japan’s austerity plan lacks details and conviction. On the other hand, Kan may be waiting until next month’s upper house elections conclude before revealing more specifics. Meanwhile, the USD/JPY is also facing headwinds from a declining Euro as investors lock in profits from this month’s risk rally. Investors are currently awaiting existing home sales data from the U.S. Although Japan will be quiet on the wire tomorrow, the EU will print its flash PMI data set along with the UK’s BoE meeting minutes and the Fed’s monetary policy decision. Hence, there will be several fundamental and psychological factors impacting the FX markets over the next 24-48 hours.
Technically speaking, the USD/JPY faces multiple downtrend lines along with 6/21 and 6/16 highs. As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with intraday and 5/26 lows. Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.
Present Price: 90.67
Resistances: 90.74, 90.86, 91, 91.13, 91.34., 91.48, 91.70, 91.85
Supports: 90.63, 90.50 90.31, 90.20, 90.05, 89.90, 89.77, 89.55
Psychological: .90, .92, June highs and lows
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