FBS: USD/JPY prospects
USD/JPY upside has been capped by the 98.70 level since Monday. Japanese yen proves unable to continue the depreciation as long as the US budget crisis supports demand for the safe assets. Yen remains a haven despite all the easing attempts of the Japanese government. However, at the moment we don’t see any panic USD selloff: the pair holds above 98.00 yen. The main reason of a relative tranquility on the market is the inner confidence that the crisis will be resolved - as it had already been done a couple of times before. We’ll see.
USD/JPY could fall dramatically in case if budget talks in Washington do fail and the US defaults. On the other hand, any temporary deal on debt ceiling reached in the coming days could support the risk-on sentiment, pushing USD/JPY towards the 100 handle. Near-term resistance for the pair lies at 98.80 and 99.00, while support – at 98.10/00, 97.60/50 and 97.00.
Chart. H4 USD/JPY