By Fast Brokers – The USD/JPY extended yesterday’s pullback amid disagreements between the government and central bank in regards to monetary policy. While the government wants a looser monetary policy to help counter deflationary pressures and prop up the economy, the BoJ is holding steadfast in its intent to avoid additional monetary creation. The BoJ’s tight stance despite mounting pressure has led investors back to the Yen with the expansion of QE measures looking less likely for the time being. Meanwhile, upcoming U.S. and Japanese economic 
data could create some volatility in the USD/JPY due to the uncertainty surrounding policy. Stronger than expected U.S. data could favor the USD/JPY, and vice versa. On the flipside, strong economic data from Japan could place further downward pressure on the USD/JPY with investors expecting the continuation of a neutral monetary policy. Japan will release its Trade Balance data during tomorrow’s Asia trading session followed by New Home Sales from the U.S. along with Bernanke’s testimony before Congress. Hence, activity could pick up in the USD/JPY over the next 24-48 hours.
Technically speaking, the USD/JPY has multiple downtrend lines serving as technical barriers along with intraday and 2/17 and 2/19 highs. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with 2/17, 2/16 and 2/12 lows. Furthermore, the highly psychological 90 level could serve as a technical cushion should it be retested.
Present Price: 90.71
Resistances: 90.92, 91.03, 91.13, 91.28, 91.37, 91.46
Supports: 90.66, 90.53, 90.47, 90.33, 90.24, 90.12
Psychological: 90, February highs and lows
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