FXstreet.com (Barcelona) - The USD/JPY posted a remarkable recovery in the second half of the month after having dropped to a 87.10 low on Jan 21. On its two-week rally from 89.70, the Dollar confirmed a double-bottom figure once it went through 94.64 Jan 6 high.
The month ended with the pair consolidating between 97 and 98, and, according to Nicole Elliott, senior technical analyst at Mizuho Corporate Bank, the Dollar has put an end to its sharp decline from August: The 'double bottom' at 87.10 has done a miraculous job stemming the catastrophic losses that started in August last year, resulting in one of the biggest monthly rallies ever. We feel this has put a 'full stop' to the decline and that the Yen will hold above here this month and possibly for the whole of Q2 2009.
The Dollar will be somewhat hesitant on the month ahead, says Elliott, as half of the previous major decline has been already retraced: Having retraced 50% of the prior major decline, expect some hesitation under here this week, and around here for much of March. Cautious upside probes are likely, with some long term investors probably fretting should we trade above the psychological level at 100.00.