By Fast Brokers – The USD/JPY is trying to avoid a retest of its highly psychological 90 level after the Nikkei underwent another sizable sell-off. Japanese bond yields hit fresh lows and are around December 2008 levels as investors head for the safety of government bonds. The Yen is benefitting from gradual risk aversion, a signal that some investors are losing confidence in the global economic recovery despite newfound stability in the Euro. Naoto Kan continues to emphasize the government’s intention to reign in Japan’s budget deficit, a Yen positive. Meanwhile, it will be interesting to see whether the EUR/USD and Cable can retest and surpass monthly highs. If so, this could help balance the USD/JPY and keep the currency pair above 90 due to its positive correlation with the risk trade. Investors will be focusing on the U.S. today with new home sales and the Fed’s monthly monetary policy decision on the way. Japan will dot the data wire tomorrow with its trade balance, though psychological forces from the West will likely drive markets through the end of the week.
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: 90.47
Resistances: 90.50, 90.63, 90.74, 90.86, 91, 91.13, 91.34., 91.48
Supports: 90.31, 90.20, 90.05, 89.90, 89.77, 89.55, 89.35
Psychological: .90, .92, June highs and lows
(click chart to enlarge)
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