Historical:
Support: 76.70 76.45 76.20
Resistance 77.00 77.30 77.55
Rule:
USD/JPY: The USD/JPY foreign currency exchange rate is the price of one U.S. dollar – the base currency – in terms of Japanese yen – the quote currency. For example, a bid/ask quote of 89.29/89.32 means that one U.S. dollar can be bought for 89.32 yen and one U.S. dollar can be sold at 89.29 yen.
If the U.S. dollar is expected to appreciate against the yen, then the above quote might rise to say, 89.73/89.76. The forex strategy in this case would be to buy USD/JPY. If, on the other hand, the U.S. dollar is expected to depreciate against the yen, then the above quote might fall to say, 88.68/88.71. The forex strategy in this case would be to sell USD/JPY.
In the USD/JPY trade, trying to pick tops or bottoms during that time would have been difficult. However, with the bull trend so dominant, the far easier and smarter trade was to look for technical opportunities to go with the fundamental theme and trade with the market trend rather than to trying to fade it.
Against the Japanese yen, whose central bank held rates steady at zero, the dollar appreciated 19% from its lowest to highest levels. USD/JPY was in a very strong uptrend throughout the year, but even so, there were plenty of retraces along the way. These pullbacks were perfect opportunities for traders to combine technicals with fundamentals to enter the trade at an opportune moment.
Daily range average : 80-90 pips
Best time to trade: Asian Session (2400 GMT – 0900 GMT)
Some factors affecting the USD/JPY rate:
- The interest rate differential between the Bank of Japan(BoJ) and the Federal Reserve
- Japanese government intervention to strongen their currency sends USD/JPY lower
Applying Technical Analysis and/or Analyzing Fundamental News from the Asian zone to make USD/JPY trading decisions. Breakouts are often true and sustained ones.
Analysis and Recommendation:
The USD/JPY dropped this past week, the data from the US was very mixed and the interpretation was left without clear direction, retail sales came in under forecast and way below the market sentiment. Unemployment claims jumped unexpectedly, but the government seemed to be able to spin the data.
It seems that the EU crisis is taking center stage and overshadowing all else.
The Japanese Yen (JPY) the USD/JPY fell down to Y76.70 as the USD weakened broadly in the European session but the market was supported by strong buying in the EUR/JPY which is still well below the Y100 level and the target for any short covering rally. The AUD/JPY is ranging under the Y80 and a break above could prompt more gains in the former carry trade favorite. GBP/JPY is still under pressure and struggling to gain traction. The drop in the euro, allowed the yen to reach an 11 year high. If the euro advances this week, the yen will surely drop.
The downgrades and statements from Standard and Poor’s will most definitely effect the Asian session on Monday. The US markets are closed for a holiday. The yen will present an excellent buy opportunity as the markets open against the euro.
The rest of the economic news for the upcoming week will continue to be overshadowed by the EU. The EU is a major trading partner with Japan. These downgrades will have an economic effect on GDP and Exports from Japan.
Originally posted here
