By Fast Brokers – The USD/JPY has popped back to its psychological 94 level after suffering a sizable leg down yesterday. The USD/JPY headed south yesterday as investors snapped up the Yen in reaction to risk-averse flows across the FX market. The USD/JPY showed that the Yen is still a favored safe haven in times of accelerated uncertainty. However, the USD/JPY has recovered quickly with investors buying up Japanese bonds as investors divest from Greece and other fiscally troubled EU nations. Additionally, Japan’s retail sales stormed higher by 4.7%, signaling the nation’s economic recovery is gaining traction. As a result, there may be less pressure on the BoJ to loosen its policy since inflation may pick up with consumption. Japan will be on a banking holiday tomorrow, meaning attention will be focused on the Fed’s monetary policy decision later today. Though the central bank is expected to keep its policy unchanged, any tightening in the time frame could really boost the USD/JPY. However, if the Fed’s statement remains unchanged then the reaction may be negligible. Altogether, it wouldn’t be unreasonable to presume that activity will pick up over the next 24 hours since the Fed normally packs the punch to really move the FX markets.
Technically speaking, the USD/JPY faces technical barriers in the form of previous April highs. As for the downside, the USD/JPY has multiple uptrend lines serving as technical cushions along with intraday, 4/23, 4/22, and 4/19 lows. Additionally, the psychological 93 level could continue to serve as a psychological cushion should it be tested.
Present Price: 93.92
Resistances: 94.03, 94.20, 94.33, 94.52, 94.66, 94.79
Supports: 93.88, 93.73, 93.60, 93.45, 93.29, 93.04
Psychological: .94, .93, April highs and lows
(click chart to enlarge)
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