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USD/JPY: bulls not giving in without a fight

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Oct 16, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Guatemala) - USD/JPY has opened relatively mixed with a slight bid as we progress in the open on the 10 minute sticks, up a handful of pips while the Nikkei opens strongly mirroring the strong performance on Wall Street today.

    USD/JPY has been better bid leading into the open on the equity performances in the US having met the 50 SMA on the hourly chart at 119.01 currently. The US session delivered a mixed outlook for the economy while the CPI's supported a PCE result that might sway the Fed into hiking in December, despite a series of other data printing poorly of late, in line with what Fed officials were discussing today.

    The US economy is performing better than the start of the year, but it still does not offer the conditions appropriate for a lift off is the general message which are good conditions for a recovery in equities while the Fed is delayed and weighs on the Yen, that has otherwise been strong of late and threatening a breakout of the recent ranges.

    However, analysts at Bank of Tokyo Mitsubishi raised a valid argument for the upside in USD/JPY on further depreciation, “Lower levels in USD/JPY will likely result in a pick-up in capital outflows and with government-related entities likely to continue to be active in diversifying domestic assets into foreign securities. But over the very short-term risks appear to be more to the downside.”

    USD/JPY levels

    Technically, a break of 116.20 is likely needed to confirm the downside although the 2012-2015 116.87 uptrend should be a tough area of support. Next stop would be 117.50 on a break of 117.90. On the flip side, 119.96 20 day ma guards recent and familiar upside resistance Resistances with last week's high at 120.57 ahead of the 200 day moving average at 120.88.
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