USD/JPY: why tax matters?
USD/JPY has found support at 97.83 today (bottom of the daily Ichimoku Cloud and close support line from November) and returned above the opening level to the levels around 98.50.
In our view, the chance for rebound stands as long as the pair’s staying above 97.50 (50% retracement of the advance from June to July. Initial target on the upside is at 99.70. There’s resistance at 98.60/70 (100-day MA, 200-hour MA, 38.2% Fibo, top of the daily Cloud) and 99.25. On the downside, below 97.65 the greenback will be vulnerable for a decline to 96.70 and probably lower, to 96.00 and 95.60. All in all, the market lacks certainty, so we may see more of the sideways trading between the mentioned key levels.
Analysts at RBS and Nomura don’t expect the Bank of Japan to ease policy on Friday. Yet, they think that it’s time to buy USD/JPY. The specialists point out that the most important question of debate in Japan is now the consumption tax hike. As the BOJ’s Governor Kuroda supports such step, it means that the central bank is ready to ease its monetary policy in future.
Chart. Daily USD/JPY