18 Sep 2013
USD/JPY focus on FOMC outcome
FXstreet.com (Athens)- The USD/JPY capped by 99.00 area due to the prevailing downtrend momentum the last couple of hours.
The USD/JPY is gaining momentum ahead of FOMC and…BoJ response
Today the USD/JPY was mainly driven by US weakness, lack of news to give further momentum to the pair, as well as on market bets not just on the FOMC release, but to some extent, to the BoJ response to the FOMC minutes. Taken for granted that even a slight tapering in a very modest pace will finally get released, the Japanese currency is far more likely to enjoy a surge in the pair (i.e. depreciation of the Japanese currency) among all the undervalued safe havens. Elaborating on, if we take into consideration the timing of BoJ’s stimulus “Abenomics” program much earlier this year, the yen crosses association to the risk trends and the substantial deviation between exchange rates and actual yield, we could well understand the impact of FOMC minutes to the USD/JPY. Needless to add up, the critical issue will be the BoJ response to such a scenario.
Technical Outlook and Strategic Bias on USD/JPY
If it were not about the FOMC and BoJ (?) response, we could say that we are ahead a quiet Asian markets week as Chinese markets are closed on Thursday and Friday due to the mid-Autumn festival (the Hong Kong Stock Exchange is shut on Friday only). Karen Jones, Head Technical Analyst at Commerzbank suggests that the “USD/JPY our view remains neutral to positive. Last week the market stalled at 100.62 and is seeing a minor correction lower. We have minor support at 98.25. The upside bias remains above the 97.26 support line, but ideally we should now see dips hold the cloud support at 98.27/97.64. Our initial upside target is the 101.54/60 July high and the Fibonacci retracement, with a long term Fibonacci retracement offering a 105.48resistance point above here. Below 97.26 we would revert to neutral as the risk will increase of further slippage to the 200 day ma at 95.65.”
The USD/JPY is gaining momentum ahead of FOMC and…BoJ response
Today the USD/JPY was mainly driven by US weakness, lack of news to give further momentum to the pair, as well as on market bets not just on the FOMC release, but to some extent, to the BoJ response to the FOMC minutes. Taken for granted that even a slight tapering in a very modest pace will finally get released, the Japanese currency is far more likely to enjoy a surge in the pair (i.e. depreciation of the Japanese currency) among all the undervalued safe havens. Elaborating on, if we take into consideration the timing of BoJ’s stimulus “Abenomics” program much earlier this year, the yen crosses association to the risk trends and the substantial deviation between exchange rates and actual yield, we could well understand the impact of FOMC minutes to the USD/JPY. Needless to add up, the critical issue will be the BoJ response to such a scenario.
Technical Outlook and Strategic Bias on USD/JPY
If it were not about the FOMC and BoJ (?) response, we could say that we are ahead a quiet Asian markets week as Chinese markets are closed on Thursday and Friday due to the mid-Autumn festival (the Hong Kong Stock Exchange is shut on Friday only). Karen Jones, Head Technical Analyst at Commerzbank suggests that the “USD/JPY our view remains neutral to positive. Last week the market stalled at 100.62 and is seeing a minor correction lower. We have minor support at 98.25. The upside bias remains above the 97.26 support line, but ideally we should now see dips hold the cloud support at 98.27/97.64. Our initial upside target is the 101.54/60 July high and the Fibonacci retracement, with a long term Fibonacci retracement offering a 105.48resistance point above here. Below 97.26 we would revert to neutral as the risk will increase of further slippage to the 200 day ma at 95.65.”