FUNDAMENTAL ANALYSIS
The USD/JPY is back up after suffering from last week's equities sell-off. The retracement provideded a new opportunity to go long and profit from a potential escalation towards .9500.
The yen is loosing strength against all other currencies as the economical recovery develops and investors get back in carry trades. The USD/JPY profits from positive U.S. data and any sign of interest rate hikes by the Fed.
On the downside, the yen is quick to replay its role of safe-haven currency on any negative sentiment accross the market. Moreover, gains are slowed down by Japanese exporters who sell on spikes.
Japan is showing signs of recovery as exports and corporate profits improve, but the Bank of Japan continues its fight against deflation. Despite an improving economical outlook, the BOJ still believes the recovery cannot yet be sustained without the support of policy measures.
On the other hand, signs have shown that the yen is slowly recovering its funding currency status instead of the dollar, which should depreciate the currency in the long term.
TECHNICAL ANALYSIS
The 4-hour chart reveals an important trendline (T4) around which the price has been evolving since early March. A quick dip below 92.15 allowed investors to refill their long positions and send the pair back above 93.00.
The daily chart shows a reversal of the price after a breach of the down trendline (T1) in March. The new uptrend is capped by a trendline (T2) that can be used as a guide to set profit targets on long term positions.
Resistance levels:
- 93.72
- 94.69
Support levels:
- 93.00
- 92.15
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