The Japanese Nikkei index opened the week on the back foot, and USD/JPY dropped with it once again. With all these falls, the pair doesn’t have much room before it touches the magical 100 line. At thte time of writing, the pair already fell to 100.12.
Dollar/yen had a very hard time breaking above 100, and when this finally happened the move was impressive. Will the line be defended once again, or will we see a break that will snowball into a collapse?
Update: After reaching 100.02, USD/JPY bounced back above 100.20.
Update 2: The answer is break: Weak US Manufacturing PMI sent USD/JPY crashing below 100.
The Japanese Nikkei 225 index closed at 13261.82 points, 3.72% lower. There has been a strong correlation between USD/JPY and the Nikkei, as clearly seen here and here.
The long term direction of the pair remains to the upside: the QE program of the BOJ is much bigger than that of the Federal Reserve. And while the Fed is considering tapering, the BOJ is only beginning to enlarge the program.
However, the correction may be bigger than expected, and the only certainty is around the extreme volatility. At the moment, the slide of USD/JPY is accompanied by a weaker dollar across the board, with EUR/USD on the rise towards 1.3050.
Support appears at around 0.9940, followed by 0.9890. Resistance is at 100.66 and 101.44. The battle around 100 continues.
For more, see the USDJPY forecast.
[do action=”tradingviews” pair=”USDJPY” interval=”60″/]
Share
