By Fast Brokers – The USD/JPY has awoken from its slumber, shooting higher in reaction to a wave of risk aversion hitting the FX markets. With IMF involvement in Greece’s rescue looking more likely investors sent the Euro tumbling. Additionally, Fitch lowered its credit rating for Portugal, accelerating risk aversion as investors head toward the Dollar for safety. The USD/JPY has been a direct beneficiary from today’s developments in the EU, sending the currency pair flying towards its February highs. The USD/JPY broke through some key downtrend lines in the process, including our top tier running through previous 2010 highs, indicating the USD/JPY could be heading towards the 93.75 level over the medium-term. This morning’s Trade Balance data showed Japan had a stronger than expected surplus last month. Export demand is picking up, particularly to China, and this seems to be adding fuel to the USD/JPY’s topside breakout. U.S. Core DGO data outperformed, indicating U.S. consumption is picking up slowly, a positive development for Japan’s manufacturing base. Meanwhile, investors are awaiting U.S. New Home Sales data and this number could prove to be a market mover. Japan will be relatively quiet on the data wire tomorrow, leaving investors to focus on the EU summit. A key for the USD/JPY will now be to break out beyond February highs, or the currency pair may opt to consolidate earlier gains.
Technically speaking, the USD/JPY faces technical resistance in the form of February 2010 highs and the psychological 92 area. As for the downside, the USD/JPY has fresh uptrend lines serving as technical cushions along with 2/22 and intraday lows.
Present Price: 91.87
Resistances: 91.96, 92.05, 92.15, 92.24, 92.39
Supports: 91.77, 91.68, 91.58, 91.47, 91.40, 91.28
Psychological: February highs, 92
(click chart to enlarge)
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