USD/JPY holds below 103.00
USD/JPY tried to rebound today after Japanese Economics Minister Amari took his words concerning the yen’s excessive drop back. However, the upside was capped at 102.80 before easing back to 102.60.
Events scheduled for tomorrow may clarify further dynamics of the pair. Firstly, the market will be closely watching Bernanke’s testimony in Congress. Secondly, BoJ will announce its policy decision after a two-day meeting (no changes expected). According to Commerzbank analysts, the yen looks set to resume its recent weakening even if Bernanke doesn’t give any tightening hints. JPMorgan economists agree: “Eventually it will be hard for the market to ignore the amount of bonds the BoJ is buying”.
We would recommend buying on a break above 103.30 with a taget of 105.00. Sell orders are clustered at 103.00, 103.30, 103.60 and 104.00, while buyers sit at 102.50, 102.00 and 101.50. Even if the pair extends the dip, the 100.00 support (top of the ascending triangle) is likely to hold.
Chart. Daily USD/JPY