USD/JPY: general analysis for February 04, 2014

4 February, 2014

Current trend 

Following the lows at the level of 105.45, the Japanese Yen started to strengthen against the American dollar. The USD has lost about 500 points and the USD/JPY rate is approaching psychologically important resistance level of 100.0. If this level is broken down, the pair will soar up to the levels of 98.00 and 96.00.

According to economists there are no reasons, which could have caused the fall in the USD against the Yen and market is experiencing minor correction. Moreover, monetary policies in these countries are completely opposite: US fed is reducing quantitative easing programs, while Central Bank of Japan, on the contrary, injects cheap liquidity in order to overcome inflation.

It is worth noting that first positive results are evident: unemployment rate in Japan fell to 3.7%, number of new jobs increased by 2.8%. Sales of new cars have also risen by 27.5% versus previous year. However, due to the rise of sales tax from 5% to 8% car dealers think that this year’s sales are going to fall. 

Support and resistance

The nearest support level is psychologically important level of 100.00. Support level is the bottom limit of the trading channel of 101.95.

Trading tips 

Short positions are recommended after breakdown of the level of 100.00 with stop-loss at 100.50 and a target of 98.20.

 

Dmitry Agurbash

Analysts of LiteForex Group of Companies


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