USD/JPY: can USD/JPY break below 118.00?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 7, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Guatemala) -USD/JPY is relatively quiet at the moment. The market has been in risk-off mode for the start of the year and a lot of that has already been priced into the Yen.

    USD/JPY has taken out key levels on the way down, but there is a good deal of support in the 118 handle slowing down the bears momentum. Fundamentally, Kuroda could be the bulls saving grace and his recent comments might support USD/JPY as the nation contemplates taking extra measures to achieve their inflation target of 2% in the given time frames.

    Meanwhile, the ADP report for the US jobs sector might be another supporting factor for the dollar over the next few sessions until the Nonfarm Payrolls data is released, and if the ADP report is anything to go by a prelude then markets might brace for a decent outcome and another rally in the greenback.

    Stocks should be monitored also and hints of further hikes from the Fed could be another supporting factor for higher USD/JPY, lower stocks and back we go, steadily towards the familiar ranges and the cluster of daily ma's converging on the 121 handle. For now, all eyes are on the yuan fix again and Chinese stock markets.

    USD/JPY levels

    Technically, Valeria Bednarik, chief analyst at FXStreet explained that in the 4 hours chart, the technical indicators are turning back lower within bearish territory and after correcting oversold readings, "supporting additional declines for this Thursday, with the pair now poised to extend down to 116.60 on a steady decline below the 118.00 mark". However, the 118 level should be a tough level of support for the bears to crack without a strong catalyst as it has been so since Feb last year.
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