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Thursday’s intra-day low of 102.88, was, except for the brief panic plunge on March 9 and 10, the deepest the USD/JPY has been in four years. Friday’s rebound at 103.10 was keyed on the brief plunge in the early March panic and was more of a reference point than a well-establish support line. The many and recent resistance lines make a trend reversal difficult without a dramatic change in the fundamental picture, Joseph Trevisani, an Analyst at FXStreet, reports.

Key quotes

“The overall decline in the USD/JPY has been dictated by several trends that are yet active. The withdrawal of the dollar safety premium over the months after the March panic established a direction that has devolved into inertia but in the absence of a counter-argument remains effective.”

“The Fed quantitative easing program has successfully inhibited the rise in US interest rates that would have occurred given the likely economic rebound in the first half next year. The US recovery has been blunted by the business shutdowns in several states. Market rates will rise despite the Fed but not until the US economy sees secure growth.”

“As has been evident since the two-figure gain on November 9, the energy of the decline has expired. But a reversal can only come from an accelerating US economy and the inherent rate and demand improvement that will bring, without that the USD/JPY slippage will continue.”

“The support below 103.10 dates to the first half of 2016 and is shaky. As has been true since the beginning of November the conviction to move lower is weak. It may require a period below 104.00 if a serious attempt to head toward 101.00 is to be undertaken.”

“The 21-day moving average at 104.06 reinforces resistance at 104.00. The 100-day at 105.13 and the 200-day at 106.34 are not currently important.”