Currency pair USD/JPY has grown at the beginning of this week reaching six-month highs at the level of 101.91. The rise in the pair is supported by expectations of phasing out quantitative program in the USA. It is assumed that even in case of the decrease in the volume of American securities. Ultrasoft monetary policy in Japan will be continued. According to Japanese politicians, Abenomics bears fruit: weak Yen helps to regain competiveness of Japanese products; GDP in the country is growing and inflation rate is slowly increasing (although the target level of 2% has not been reached yet).
Support and resistance
Technical indicators show that on Monday the pair broke down the upper limit of the ascending channel and later went back inside its limit. The key level is the moving average line of “Bollinger bands” indicator (101.30). If this level is broken down downward correction can continue to the level of 100.70. However it is most likely that upward movement go on to the level of 101.80 and 102.30. Indicators give mixed signals. Bollinger bands are directed upward and demonstrate narrowing in advance of sharp changes in price. MACD histogram is in the positive zone, its volumes are decreasing. Stochastic lines are directed downward.
In the current situation it is advisable to open positions with profit taking at the level of 102.30. Short positions with the target of 100.70 can be opened if the price breaks down the level of 101.30.
Analyst of LiteForex Group of Companies