FXstreet.com (Barcelona) - The USD/JPY has bounced back from last week's low at decline to 95.65 reaching levels above 98.00 on Monday. However, the USD/JPY seems to have formed a downward trending resistance line off 99.68 Mar 5 high, with lower tops and bottoms ever since.

Nicole Elliott, senior technical analyst at Mizuho Corporate Bank affirms that 99.68 might be a long term top: It might just be possible that we have formed an interim high at 99.69, but until we start holding consistently below the 97.00 area this has yet to be confirmed. Therefore the outlook for this week and possibly for the rest of this month is unclear.

Nevertheless, Elliott warns above a spike high above 100 before the end of the month: We also cannot rule out a very brief 'spike high' this month at 100.55 before a slide to 93.00. In this case one-month at-the-money implied volatility should creep back up to the 25.00% area. Note that open interest in the futures contract is running at about one quarter of the 2007 peak, evidence of unwinding the 'carry trade'.