30 Oct 2013
USD/JPY eyes 98.50 area ahead of FOMC
FXstreet.com (Athens) – The USD/JPY has been heading upwards since the early start of the Asian session partly due to Nikkei solid gains but mainly on ‘risk-on’ appetite as markets have been primed for dovish FOMC.
USD/JPY upwards as markets have been well primed for dovish Fed; Nikkei soared by 1.23%
The USD/JPY is trading higher for a fourth consecutive day, while yesterday made a sharp pullback near its 200-daily MA (97.47). After three “green” days, the cross shows that it has regained an uptrend momentum, thus, traders should not be taken aback if the pair manage to overcome the barrier as of 98.50, where is laying a confluence of strong resistances. Traders might attribute the uptrend momentum of the pair partly to the Nikkei, which closed on Wednesday with solid gains up 1.23%. As it is widely known there is an immense inverse correlation of the Japanese currency and the Nikkei and to put it more precisely, the 20 –day correlation between USD/JPY and Nikkei 225 Index is roughly standing at (+0.5821). But looking behind the curtains, we might probably realize that the pair is heading upwards because market participants have by far primed that the FOMC outcome will be a dovish one.
Technical Aspects on the USD/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “USD/JPY continues to rebound from its 4 month support line at 97.04.This guards the current October low at 96.55 and the six month support line at 96.00. The market has been contained in a large contracting range for the past 6 months and currently we have no real indication that the market is ready to break down through 96.00, but there is scope to test this level and the downside risk remains. Rallies will find minor resistance at 98.48 ahead of 99.01/06 last weeks high.”
USD/JPY upwards as markets have been well primed for dovish Fed; Nikkei soared by 1.23%
The USD/JPY is trading higher for a fourth consecutive day, while yesterday made a sharp pullback near its 200-daily MA (97.47). After three “green” days, the cross shows that it has regained an uptrend momentum, thus, traders should not be taken aback if the pair manage to overcome the barrier as of 98.50, where is laying a confluence of strong resistances. Traders might attribute the uptrend momentum of the pair partly to the Nikkei, which closed on Wednesday with solid gains up 1.23%. As it is widely known there is an immense inverse correlation of the Japanese currency and the Nikkei and to put it more precisely, the 20 –day correlation between USD/JPY and Nikkei 225 Index is roughly standing at (+0.5821). But looking behind the curtains, we might probably realize that the pair is heading upwards because market participants have by far primed that the FOMC outcome will be a dovish one.
Technical Aspects on the USD/JPY
Karen Jones Head Technical Analyst of Commerzbank, mentions that the “USD/JPY continues to rebound from its 4 month support line at 97.04.This guards the current October low at 96.55 and the six month support line at 96.00. The market has been contained in a large contracting range for the past 6 months and currently we have no real indication that the market is ready to break down through 96.00, but there is scope to test this level and the downside risk remains. Rallies will find minor resistance at 98.48 ahead of 99.01/06 last weeks high.”