The USD/JPY is continuing its consolidation around its highly psychological 90 level as investors digest headwinds from all different directions. Investors headed towards safe havens yesterday after rumors spread that China is reconsidering its exposure to EU assets. However, the risk trade has made a comeback today after Chinese government officials denied these claims. Meanwhile, EU countries are in the process of passing their respective austerity packages. Hence, investors should keep a sharp eye on the EU news wire as events unfold. Japan reported a stronger than expected trade surplus today as demand from China helps Japanese manufacturers regain their footing. The Nikkei responded by gaining over 1.2% and this brings a bit of risk appetite to the table. However, focus remains on the EU and the U.S. with prelim GDP and weekly unemployment claims on tap. Despite present consolidation in the USD/JPY, investors should keep in mind that the USD/JPY has the potential to come alive at a moment’s notice as we’ve seen in the past. Hence, we’ll have to see what the currency pair decides to do with 90.
Technically speaking, the USD/JPY faces technical barriers in the form of multiple downtrend lines along with 5/24 highs and 5/20 highs. As for the downside, the USD/JPY has technical supports in the form of 5/25 and 5/20 lows. Additionally, the highly psychological 90 level could have a gravitational pull on the USD/JPY over the near-term.
Present Price: 90.31 Resistances: 90.42, 90.55, 90.64, 90.77., 90.88, 91.14 Supports: 90.30, 90.11, 89.99, 89.84, 89.73, 89.54, 89.34 Psychological: .90, May and March lows
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