By Fast Brokers – The USD/JPY experienced a solid pop this morning after news spread that Hatoyama is stepping down after polls showed is approval rating fell below 20%. Upper house elections are only a month away and it seems Hatoyama is trying to salvage some of the momentum gained by the DPJ last year. Although the yen declined in reaction to the news, gains in the USD/JPY have been muted thus far and the currency pair is presently trading off of intraday highs. Finance minister Kan is rumored to be Hatoyama’s successor and investors are looking at this possibility in a favorable light due to Kan’s fiscal conservatism. Hence, we’ll have to see how the situation plays out. Either way, the next few trading sessions could prove to be volatile for the USD/JPY. Japan will be relatively quiet on the data wire throughout the rest of the week, meaning psychological should be in the driver’s seat along with upcoming U.S. employment data. Meanwhile, investors should keep an eye on the news wire for any new developments regarding China’s real estate market or the EU’s fiscal crisis. Even though Hatoyama’s resignation is certainly a major development, attention could shift to China and the U.S. rather quickly considering the amount of news flowing around these days.
Technically speaking, the USD/JPY still faces multiple downtrend lines along with intraday, 5/19 and 5/18 highs and psychological 92 level. As for the downside, the USD/JPY has technical supports in the form of multiple uptrend lines along with 6/1 and 5/26 lows. Additionally, the highly psychological 90 level should serve as a solid technical support should it be tested.
Present Price: 91.45
Resistances: 91.53, 91.65., 91.80, 91.96, 92.11, 92.25
Supports: 91.29, 91.13, 91, 90.86, 90.74, 90.63, 90.52
Psychological: .90, .92, May lows
(click chart to enlarge)
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