USD/JPY: battle at 101.30/100.50

USD/JPY is once again testing 100.50 to the downside. The next levels to watch are 100.18 (top of the monthly Ichimoku Cloud), 100.13 (200-period MA at H4) and 100.00 (psychological level). The pair has a scope for a deeper correction down and the monthly close below these levels will be a bearish sign. The near-term outlook seems negative as long as USD/JPY trades below 101.15 and 102.00. There’s also resistance at 102.50, a break above which would open the way to 103.74 ahead of 105.60.

US weakened after lower-than-expected GDP data released yesterday. Japan published encouraging inflation and industrial production readings. Nikkei 225 closed up by 1.37% at 13,774.54 – this is for now holding yen’s advance (when Japanese stocks rise, the risk appetite of Japanese investors improves and they tend to invest abroad selling JPY).

Large options expire at 14:00 GMT in New York followed 1 hour later by the asset manager rebalancing. US currency is vulnerable as market players adjust their positions bore the month’s end. Most dealers expect these events to weigh on USD/JPY as the session develops in Europe.

Chart. Daily USD/JPY

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