USDJPY: The pair has almost wiped out its two week gains and is setting up to recapture the 78.27 level, its Nov 29’2011 high. However, the big challenge will be a test and violation of the 79.49 level, its Oct 2011 high. Above here if seen will bring further strength towards the 81.47 level, its July 08’2011 high and subsequently the 82.21 level, its May 24’2011 high. Its weekly RSI is supportive of this view as it is bullish and pointing higher. On the downside, the risk to its present upside offensive will be a return below the 76.57 level. Further down, support comes in at the 75.57 level, its Oct’2011 low with a break turning attention to the 74.00 level and then the 73.00 level, all representing its psycho levels. All in all, USDJPY could be preparing to return to the 79.49 level despite its long term downside vulnerability.
