USD/JPY Weekly Outlook

By Roger Baettig | August 04 2012 3:38 PM

Despite edging lower to 77.90, USD/JPY didn't extend the decline but recovered. The break of 78.67 minor resistance indicates that a short term bottom is already in place. Initial bias is mildly on the upside this week and stronger rebound could be seen back to 79.13 support turned resistance and above. Nonetheless, break of 77.90 will extend the fall from 80.61 again towards 77.66 low.

In the bigger picture, firstly, there is no sign of reversal in USD/JPY yet and the larger down trend from 124.13 is still expected to continue. Nonetheless, consolidation pattern from 75.56 should extend for a while below 85.51 first. In anyway, we'd stay bearish as long as 85.51 resistance holds and expect an eventual downside breakout.

In the long term picture, with 85.51 resistance intact, there is no scope for trend reversal yet. Though, some more consolidative trading would be seen in medium term above 75.56 first before the long term down trend from 124.13 eventually resumes to 70 psychological level.