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- USD/JPY Technical Strategy: Flat
- Support: 102.07, 101.83, 101.54
- Resistance: 102.31, 102.60, 102.79
The US Dollar reversed violently lower against the Japanese Yen, posting the largest daily decline in four weeks. Sellers are testing support at 102.07, the 50% Fibonacci retracement, with a daily close below that exposing the 61.8% level at 101.83. Alternatively, a reversal above the 38.2% Fib at 102.31 opens the door for a test of the 23.6% retracement at 102.60.
It appears that our reluctance to enter long after a push through year-to-date resistance is proving prescient. While our long-term outlook continues to favor a stronger greenback against the Japanese unit, downward reversal in the SP 500 warns that on-coming risk aversion may force liquidation of Yen-funded carry trades and push the currency higher in the near- to medium-term before the larger uptrend commences. With that in mind, we remain flat.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com