FUNDAMENTAL ANALYSIS
The yen is loosing strength against all other currencies as the economical recovery develops and investors get back in carry trades.
The USD/JPY has been progressing well over the past two weeks and seems to be reversing the bearish situation in which it was stuck since last year. Positive payrolls on Friday could trigger a new up move towards 95.00 and even further. However, Japanese exporters are likely to start selling the pair above that level.
Japan is showing signs of recovery as exports and corporate profits improve. However, the Bank of Japan continues its fight against deflation and announced recently a plan to double its December lending program. Despite an improving economical outlook, the BOJ still believes the recovery cannot yet be sustained without the support of policy measures.
Oh 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 daily chart shows that the USD/JPY is out of the uptrend after a breach of the trendline.The pair already reached the 50% fibonacci retracement of last year's down move and is likely to reach the 61.2% level.
however, bearish employment data on Friday could trigger a fall back towards a re-test of the main trendline.
Resistance levels:
- 93.76
- 95.00
Support levels:
- 93.00
- 92.00
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