The LDP party victory in Japan is still containing the market sentiment after strong bullish Asian session as the market has become waiting for bigger stimulus package from BOJ which is scheduled to meet next Wednesday.

The market is wondering now whether or not the new Japanese government will be able to make its own recovery following US or not after it has been lagged distance behind it in the recent years following the credit crisis especially with its trade balance turning to be negative forming another challenge to this new government which can have wider financial stimulating plan of its own after the previous government recent plans to boost the economy which is still facing persisting deflation problem.

Japan in last September has actually displayed the biggest yearly drop of its exports since March 2011earthquake by 10.3% to highlight the possibility of more actions to come by BOJ to widen its assets purchasing plan after its first back to back increases in last September driving its amount up to 55tr yen under continued political pressure forming another downside risk to the Japanese yen which can be depressed too by its plan to pursue its short term inflation target at 1% yearly and long term at 2% yearly which have been announced last February while the global economy is contained currently by the fiscal cliff negative impact and the weak economic performance in EU.

So, from the other side, the Japanese yen can be buoyed by the worries about the fiscal cliff in US as a risk haven option that’s beside the profit taken pressure after the LDP part success over the next hours as it has been actually priced in the market and USDJPY came back to be traded below 84 as it was obvious to far extent in the recent weeks to the market but its success to gain strong majority to rule out the lower house easily came to add to the USDJPY in the beginning minutes of the week.

God willing, after USDJPY had had the ability to get over its previous resistance at 84.17 today reaching 84.32 it can face in its ascending was another resistance at 85 psychological level which can be followed by 85.51 before higher resisting levels at 88.1 , 89.14 . 90 psychological level, 92.87 and 94.97 which has been the formed top on the 4th of may 2010 while easing back from here can be met by supporting levels at 83.23, 82.1, 81.68, 80.87, 80 psychological level, 79.06, 77.93 and 77.10 whereas it’s formed its bottom on 13th September this year to these current levels on the BOJ last stimulating efforts in last September.


Kind Regards

FX Market Strategist

Walid Salah El Din

Mob: +20 12 2465 9143


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