13 May 2014
USD/JPY still faces ST downside risks - JPMorgan
FXStreet (Bali) - The range bias in USD/JPY continues to develop, but the short term downside risks have not been eliminated, notes the FX Strategy Team at JPMorgan.
Key Quotes
"Like many USD pairs, USD/JPY is testing critical support levels which should have both short and medium term implications. In this regard, the key focus stays on the 101.50/100.75 support zone which represents the range lows going back to February, as well as the 50% retracement of the rally from the October low. Moreover, this area includes the trendline support from the June low and the 200-day moving average."
"While the short term oversold framework argues for some pause/retracement against this area, there is still no sign of a sustained reversal. Downside breaks would imply a closer test of the 100/99.95 area (include the 61.8% retracement from the October low), before the critical 99.01/98.65 area. This zone includes the November breakout area and should be a max if new highs are still in the cards."
"The ability to rally back above the 103.02 resistance level and US payrolls day high would be the first sign that the upside momentum is gaining traction again. Note that an extension above the 104.13 April peak is necessary to confirm the medium term uptrend is back on track."
Key Quotes
"Like many USD pairs, USD/JPY is testing critical support levels which should have both short and medium term implications. In this regard, the key focus stays on the 101.50/100.75 support zone which represents the range lows going back to February, as well as the 50% retracement of the rally from the October low. Moreover, this area includes the trendline support from the June low and the 200-day moving average."
"While the short term oversold framework argues for some pause/retracement against this area, there is still no sign of a sustained reversal. Downside breaks would imply a closer test of the 100/99.95 area (include the 61.8% retracement from the October low), before the critical 99.01/98.65 area. This zone includes the November breakout area and should be a max if new highs are still in the cards."
"The ability to rally back above the 103.02 resistance level and US payrolls day high would be the first sign that the upside momentum is gaining traction again. Note that an extension above the 104.13 April peak is necessary to confirm the medium term uptrend is back on track."